Credit Insurance Services - KODIT

Introduction

In 2010, KODIT underwrote a record KRW 5,966 billion in Credit Insurance Services.

KODIT has two kinds of credit insurance services : Bill Insurance Service and Receivables Insurance Service. KODIT introduced Bill Insurance Services in September 1997 and Receivables Insurance Services in March 2004 to protect SMEs from chain reaction bankruptcies arising from dishonored commercial bills or non-payment of receivables for the goods and services that SMEs provided to buyers.

Type of Operation

Receivables Insurance Service

Receivables Insurance Service, which insures not only commercial bills, but also receivables of SMEs, was selected as The Best New Financial Product in September 2005 by Hankook Daily Newspaper, one of the leading media in Korea, due to the freshness, competitiveness and marketability of the service. In October 2005, KODIT obtained a patent for its ways and systems to insure sales-receivables in e-commerce, thus keeping the leading edge in this field.

Flow of Receivables Insurance Service

Bill Insurance Service

Under bill insurance services, KODIT insures the commercial bills which supplying SMEs receive from the buyers in return for their supplies of goods or services. In case the commercial bills are dishonored, KODIT reimburses 50%-80% of the par value of the commercial bills to the insured bill holders. This service was introduced to protect SMEs from chained bankruptcies due to dishonor of the commercial bills and thus to facilitate the business transactions. These days, however, companies issue less commercial bills than before because cash settlement is increasing, which makes the bill insurance services of KODIT less active.

Flow of Bill Insurance Service