In other words, an insurance policy cannot be incepted until premium payment is received by the insurer(s).This means, of course, that insurers will not guarantee any commitment to insurance cover, nor can coverage be confirmed until the relevant insurers receive all related premium payments from the insured.
We have seen an increase in cash before cover requirements from local regulators, especially in those countries where local market payment terms were lax, impacting company receivables and their solvency ratios.
This is also tied to compulsory covers, especially motor vehicle insurance, where regulators do not want to see policies cancelled for non-payment.
Many local and in-country carriers will request cash before cover if the regulations are not as clear.
What process should be in place to ensure that premiums are paid in time?
According to the current regulations, insurance coverage will not be in effect unless the premium payment is confirmed by the insurer.