credit insurance deductions

[yellowbelly]

I wrote to the company concerned yesterday and asked:

Is this an actual insurance policy?

If it is, please can I have details of what it covers, the terms under which it pays out, the amount of the invoice that is covered in any one transaction. (Apparently one scheme covers you for 90% of the transaction - why not 100% of the loss?)

What is the size/rate of the deduction.

Does the deduction go directly to the insurance company offering the cover or to XXXXXXX? (My point being - is this a premium directly related to the insurance policy or just a deduction that adds to the coffers at Joe Bloggs grain traders?)

Be very interesting to see their reply (if you get one).

 

[ploughman1963]

The more I ask about this the more angry I am getting.

Firstly, I should have the option to decide if i want this insurance. It is tucked away in terms and conditions and just listed as a deduction. Just to clarify - it wasnt included in terms and conditions when we decided to accept the offer - it suddenly appeared on the contract.

There should be clarity as to what is being paid for - details of the insurance product, details of who to contact etc, details of the premiums, details of what cover is provided.

The issue of insuring the risk twice has opened a can of worms!

This all smacks of yet another charge just imposed on us!

 

[ollie989898]

If a company is going to charge you some kind of surcharge it should be detailed in their terms of sale/purchase in plain English and people should be made aware of the fact before they agree to supply or buy from them.

Why are they stealth-ing this charge on people?

 

[farmerm]

What is everyones take on this?

We sold a load of grain on the 'Graindex' platform recently. When the contract came through on email I noticed that apart from weighbidge charges and levies, it stated that credit insurance would be deducted. I rang the trader concerned and asked for confirmation of what I thought it was for - "thats to ensure you get your money if we go bust" I was told. I said |I wasnt happy with that as we had already had the chance to pay a small premium to Graindex to cover that and decided not to. Why am I being dictated to as to whether I choose to pay insurance or not? Surely, if i want to risk them going bust thats my problem/decision?
Anyway, I was told he would come back to me - over a week and still waiting - despite asking his secretary to remind him a couple of days later.

Ive checked other contracts and cannot find anyone else weve sold to making that deduction.

I am interested to hear what others think - not as to whether its a good idea to have credit insurance, but whether I should have it imposed on me.

It occurred to me that I should write to them and say that I will be invoicing them for 'Gate insurance' - to cover the risk that their driver hits a gatepost on the way in/out. I wonder how that would go down!

Yes I know who you speak of, they have done so for years. If the company goes bust between them collecting a load of grain and them paying for the load of grain the seller will be compensated, by some unknown amount, by an unknown someone... when the load leaves the farm I have no evidence that payment for insurance for that load has been made to any underwriter and if the buyer company folded you or I would have no point of contact should we ever need to claim on said insurance. IMO such insurance seems pointless nonsense unless presented with insurance document by the driver before loading.

 

[som farmer]

all very interesting and thought provoking.

Some of the companies that cease trading, owing money to farmers, in the run up to calling in the receivers, do some pretty dodgy deals, hoping to stay afloat.

one of those, could be failing to pay the insurance, we wouldn't know if it had been paid, or not. Some of those 'dodgy deals' could easily mean the insurers would have a get out clause, and we all know they would refuse to pay, if they found a 'broken' clause, and would actively look for one.

We pay a 'insurance' either through the mkt, or abattoir like Pickstock. Only once, has a mkt refused to pay out, in about 2 claims, claiming a cull cow, wasn't fit for the mkt, because it died, on a farm, 5 days later. The auctioneers had a very different view, and sent a chq for half, by the next post. And the mkt duly lost most of our business.

So, is it better that we, as the farmer, selling a product to a firm, arrange our own insurance? Simply for the fact that we know it has been paid, and we would be paid, if the firm in question goes bang. We have no idea what that firm, has been doing, paying etc.

does make one think a bit, considerable amounts of money tied up with this now.

 

[ploughman1963]

Yes I know who you speak of, they have done so for years. If the company goes bust between them collecting a load of grain and them paying for the load of grain the seller will be compensated, by some unknown amount, by an unknown someone... when the load leaves the farm I have no evidence that payment for insurance for that load has been made to any underwriter and if the buyer company folded you or I would have no point of contact should we ever need to claim on said insurance. IMO such insurance seems pointless nonsense unless presented with insurance document by the driver before loading.

I cant like that reply enough! Couldnt agree more. Apparently, (from another source because the company concerned still havent been back in touch), the charge is 10p per ton which is actually very reasonable compared to the other credit insurance on offer - but its not about how much it is or how good an idea it is - its the blxxdy principle of it!

 

[Tim G]

Simple solution, cleared payment prior to collection.





The execution might be more tricky though....

 

[Steevo]

I cant like that reply enough! Couldnt agree more. Apparently, (from another source because the company concerned still havent been back in touch), the charge is 10p per ton which is actually very reasonable compared to the other credit insurance on offer - but its not about how much it is or how good an idea it is - its the blxxdy principle of it!

10p/tonne is one of my charges too.

Another slightly less local are 50p/tonne

 

[Steevo]

all very interesting and thought provoking.

Some of the companies that cease trading, owing money to farmers, in the run up to calling in the receivers, do some pretty dodgy deals, hoping to stay afloat.

one of those, could be failing to pay the insurance, we wouldn't know if it had been paid, or not. Some of those 'dodgy deals' could easily mean the insurers would have a get out clause, and we all know they would refuse to pay, if they found a 'broken' clause, and would actively look for one.

We pay a 'insurance' either through the mkt, or abattoir like Pickstock. Only once, has a mkt refused to pay out, in about 2 claims, claiming a cull cow, wasn't fit for the mkt, because it died, on a farm, 5 days later. The auctioneers had a very different view, and sent a chq for half, by the next post. And the mkt duly lost most of our business.

So, is it better that we, as the farmer, selling a product to a firm, arrange our own insurance? Simply for the fact that we know it has been paid, and we would be paid, if the firm in question goes bang. We have no idea what that firm, has been doing, paying etc.

does make one think a bit, considerable amounts of money tied up with this now.

I wonder whether this is something @Nigel Wellings might be prepared to advise on.

 

[Steevo]

Simple solution, cleared payment prior to collection.





The execution might be more tricky though....

30t x £300/t = £9000 up front

Any tonnage less than 30t will mean a refund to be issued to the purchaser. All refunds will be issued on an annual basis once all contracts have been fulfilled.

Any loads collected after the contract month will have their tonnage refund forfeited.

 

[farmerm]

30t x £300/t = £9000 up front

Any tonnage less than 30t will mean a refund to be issued to the purchaser. All refunds will be issued on an annual basis once all contracts have been fulfilled.

Any loads collected after the contract month will have their tonnage refund forfeited.

£300/t... that is looking wishful..

 

[Steevo]

£300/t... that is looking wishful..

Ah sorry - you're talking to a milling wheat grower.

 

[farmerm]

With an insurance renewal round the corner I would be really interested to know who underwrites their credit insurance, I really, really want their number... I mean, who else offers insurance policies providing 2.5x more cover that 5 years ago for the same premium as it was 5 years ago (including insurance premium tax).....

 

[Steevo]

With an insurance renewal round the corner I would be really interested to know who underwrites their credit insurance, I really, really want their number... I mean, who else offers insurance policies providing 2.5x more cover that 5 years ago for the same premium as it was 5 years ago (including insurance premium tax).....

Someone who was overcharging in the first place would probably be able to keep their prices the same.....

 

[yellowbelly]

Someone who was overcharging in the first place would probably be able to keep their prices the same....

As would someone who's just skimming 10-50p a tonne off all the corn they move.

 

[ploughman1963]

As would someone who's just skimming 10-50p a tonne off all the corn they move.

And unless they can provide me with the policy number and issuer I shall have to assume that is exactly what has been happening

 

[hel123]

Credit insurance is great but the only problem I can see is you can only get cover on a credit worthy client, therefore you will end up paying over the years but when the company starts to go down hill you will find no one will insure them and therefore you can't get cover when you will actually need it.

From my experience these companies don't go bust over night they start putting their ducks in a row months or even 12 months before actually going under leaving them fine and you in the sh1t.

That's my cynical opinion anyway

 

[ollie989898]

30t x £300/t = £9000 up front

Any tonnage less than 30t will mean a refund to be issued to the purchaser. All refunds will be issued on an annual basis once all contracts have been fulfilled.

Any loads collected after the contract month will have their tonnage refund forfeited.

Could be done, money can be transferred instantly these days.

 

[ploughman1963]

Still no answer from the company concerned- they’ll have to ring soon as they’ve got a load to collect

 

[Nigel Wellings]

Completely agree with the comments @ploughman1963 has been making. I make no comment on what Graindex are doing as I do not know how their scheme operates.
It has rankled with me for years about so called insurance deductions being made by livestock markets, the grain trade, cooperatives etc. Certain livestock markets in the past certainly had no such insurance cover yet deducted the money. That is fraud.
We cannot sell ANY insurance policy without complying with thousands of pages of rules from the Financial Conduct Authority (FCA-note farming not the only industry with pointless red tape!). Any insurance sold without full policy documentation in my view is therefore illegal.
A lot of these so called policies are insuring the merchant not the seller, then the seller is made to pay for it.
The chief mantra of the FCA when dealing with Insurance customers is "Treating Customers fairly". We spend a huge amount of time and money attempting to do this. I would suggest reporting any of these so called insurance deductions to the FCA unless you are given full details in writing of what they actually cover.
The FCA did an investigation some years ago of ADD ON insurance products. They were basically banned, the clients has to be made fully aware of exactly what they are buying, the policy terms of it and separate cost of it.
You are quite right to bring this point up and more people need making aware of it. I suspect across the Industry insurance deductions add up to millions yet nobody knows what cover, if any, they have.