CREDIT insurance has had to struggle to dispel the myths which surround people's perception of the product. Comments such as "costly", "inflexible", "uncompetitive", "only for the beef industry", "slow response time" are commonly encountered.

Much of this criticism emanates from the old Government credit scheme which operated under very strict controls and in a virtual monopoly situation. Conservative underwriting and rigid pricing structures commonly caused conflict between hard pressed exporters and the Government insurer.

But times have changed in the Irish credit insurance industry. Since January 1st, 1992, cover for short term commercial risks (debtor failure) has been provided by the private insurance sector, whilst the Government continues to provide cover for political and medium term risks.

The industry has been adapting to the day to day needs of clients. Clients are also changing. They are more knowledgeable about managing credit risks and, as a result, are more demanding of the services offered by credit insurers. Credit insurance is now being used by a wide variety of market sectors.

Underwriters are changing. Some have merged, others have formed strategic alliances, but all are focusing on the ever changing needs of clients.

The Insurance Corporation of Ireland, which in the past acted as agents for the Government in providing Export Credit Insurance, continues to be one of the market leaders in the provision of short term commercial credit insurance to Irish companies.

But the list of credit insurers is ever increasing: NCM, Trade Indemnity, Namur, Sun Alliance, Hermes, AIG, and Cobac are all well established European credit insurers which are now accessible to Irish brokers, particularly the specialist credit brokers.

The economics of the industry, in particular, are changing and Irish companies are now very well served in this important area. The presence of so many insurers has generated more competitive premiums and a choice of policies which can be tailored to suit a company's individual needs and budgetary constraints.

At first sight, the reason for buyer - credit insurance seems obvious - to cover loss from bad debt. This might be thought to imply that if you do not expect to make many, or any, claims, there is no point in taking out a policy.

Digging deeper, however, shows that claims payments are by no means the only benefit to be obtained from credit insurance, nor necessarily even the main one. Indeed, many businesses with extremely good records on had debts place a high value on this type of cover.

Among the bother reasons given by businesses for regarding credit insurance as vital are the following:

. Asset protection - accounts receivable often represent a larger figure in the balance sheet than fixed assets and are, arguably, more vulnerable to risk. Nobody considers the need for fire or vehicle insurance to be simply a matter of whether claims can be foreseen.

. By the same token, an increase in bad debts for which no provision has been made can threaten profits, jobs, and, in the last resort, the ability of a business to continue.

. Credit insurance imposes a beneficial discipline on credit management. Vetting requirements and the feedback of market information from insurers can provide an effective early warning system; moreover, underwriters can give valuable assistance at the stage of debt collection.

. Such services can be particularly valuable to businesses seeking to exploit opportunities in Europe and other export markets. This often means dealing with previously unknown buyers, on whom status information may be difficult to obtain or interpret.

. Credit insurance has, from its earliest days, been closely connected with credit finance. Used as collateral security, it can improve borrowing capability, bringing forth finance on more favourable terms or even in some cases when it would not otherwise have been available.

. The additional security provided by credit insurance facilitates may enable a higher volume of business to be undertaken than would have been possible without it. It can also be used as a sales tool to support drives in selected areas.

. It is especially applicable to businesses operating on low margins with high exposures.

In short, credit insurance, gives additional underpinning to the "bottom line" and can create confidence where there would otherwise be doubt and, perhaps, indecision.