UAE: ECI to use credit bureau's scores to support local traders
Source: Middle East Insurance Review | Feb 2020
In a bid to support and strengthen local traders, Etihad Credit Insurance (ECI) has subscribed with Al Etihad Credit Bureau (AECB), a federal entity that provides credit information reports in accordance with the UAE Credit Information Law.
The new subscription will enable ECI to expand its portfolio to include local trade which, in turn, will have a positive impact on the domestic economy as a whole. It further reinforces ECI’s commitment to enhance UAE businesses’ financial awareness and support them in their growth and development in the domestic arena.
AECB is mandated to regularly collect credit information from financial and non-financial institutions in the UAE. It aggregates and analyses this data to calculate credit scores and produce credit reports that are made available to individuals and companies in the UAE.
Credit scores – ranging from 300 to 900 – are issued to businesses in the UAE, measuring the likelihood of an individual or company to default within the next 12 months. The credit score is calculated using historical data from banks and finance companies. The reports will include credit information that does not exceed five years prior to the date of the application.
These reports will be used by ECI to assess the creditworthiness of domestic buyers that will support the supplier in managing the risk and provide them with trade credit coverage solutions that will help UAE businesses expand locally by protecting their receivables.
For companies looking to avail of ECI’s credit insurance solutions, ECI will use the data from AECB to evaluate the creditworthiness of the buyers, thus helping the local trader in making an informed business decision.
The ECI solution helps both the buyer and supplier as it adds confidence to grow the trade between both the parties based on reliable data and risk management procedures that will mitigate risk and reduce the probability of default.
“The effective use of tools like credit information reports can help to assess the risk of UAE businesses from the time of application throughout the entire relationship. A better credit score will not only help them to avail of better insurance solutions but also have an encouraging impact on the financial services industry which will further contribute to the strength of the UAE economy,” said ECI CEO Massimo Falcioni. M