In loan credit insurance, the creditor is the insured, and the lender becomes the insured as soon as the policy is issued. When the insured enterprise fails to repay the loan in the loan contract according to the contract, the creditor may obtain compensation from the insurer or insurance company. After receiving compensation from the insurer, the lender must transfer the creditor's rights to the insurance company or insurer, who will ask the borrower for a loan.
Use:
1. China's loan credit insurance for private small and micro enterprises broadens the channels for private enterprises to guarantee, and solves the problem of loan guarantee for small and micro enterprises to a certain extent: small and micro enterprises can obtain the loans they need in time with credit insurance, which is conducive to the development of the national private economy at this stage.
2. Relieved the contradiction between strict bank policies and increasing investment in small and micro enterprises: as a lender of credit funds, banks need to bear the risk of not being able to recover loans on the agreed date, and often require loan enterprises to provide collateral or guarantee. Loan credit insurance can be used as a guarantee to ensure the safety of bank credit funds and relieve the worries of banks.
For individuals, as long as they buy an insurance in advance, they can get a small consumer loan from the bank without collateral and guarantor to solve the urgent need.
4. Internationally, credit insurance is widely used in the financial field to avoid loan risks. In some developed countries and regions in the world, credit insurance is mostly carried out in different forms. For example, more than 90% commercial banks in the United States use credit insurance.