Over-Redemption Insurance Explained

Over-redemption insurance is a type of insurance that protects against losses when a bond is redeemed early, often due to a call by the issuer.

This can happen when a company issues bonds with a lower interest rate than the current market rate, and then decides to redeem them early to take advantage of the better rate.

If you're holding a bond that's called early, you may be left with a lower return on investment than expected.

Over-redemption insurance is a type of protection for companies that run promotions. It helps shield their budgets from unexpected costs.

This type of insurance is particularly useful because it's hard to predict how successful a promotion will be. The costs can add up quickly if a company underestimates both the cost and success of a promotion.

The financial risk of increased costs gets transferred to the insurer if a company goes over its original promotional budget. This means the company's budget is protected from unexpected expenses.

In essence, over-redemption insurance helps companies manage their finances by transferring the risk of increased costs to the insurer.

Over-redemption insurance is designed to protect companies from unexpected costs that can accumulate when promotions are more successful than anticipated. This can happen when the cost and success of a promotion are underestimated.

Unexpected costs can easily accumulate if a company goes over its original promotional budget. The financial risk of those increased costs gets transferred to the insurer, thus protecting the company's budget.

Our risk-managed sales promotions work by covering any financial risk with specialist over-redemption insurance. This allows us to provide a fixed fee per product, freeing you to be bold with your sales campaign.

We partner with your brand to establish a forecast redemption level, then cover the cost of any claims over our predictions. This backing gives you the reassurance of your campaign's overall profitability.

Over-redemption insurance is a safety net for companies that underestimate the success of a promotion. It transfers the financial risk of unexpected costs to the insurer, protecting the company's budget.

If a company goes over its original promotional budget, the insurer covers the increased costs. This helps prevent financial losses due to over-redemption.

Unexpected costs can easily accumulate when a promotion is more successful than predicted. Over-redemption insurance helps mitigate this risk by transferring it to the insurer.

With over-redemption insurance, companies can run promotions with confidence, knowing they have a financial safety net in place. This allows them to be bold with their sales campaigns without worrying about unexpected costs.

Our over-redemption insurance works by partnering with your brand to establish a forecast redemption level.

Insurance companies rate over-redemption insurance based on a number of factors, including the type of company requesting the insurance and how long they've been in business.

They also consider whether the promotion is new or being renewed, and the duration of the promotion.

The target area of the product and the number of units sold are also taken into account.

The cost per unit and the number of units the company will be using during the promotion are also important factors.

The monetary value of the coupon and whether or not advertising costs are applicable are also considered.

Previous promotions and/or redemption results are also evaluated.

The desired amount of insurance that the client is requesting is also a key factor in the rating process.

In the case of a promotion where consumers collect proofs of purchase from a yogurt lid to receive a $100 prize, the insurance company would assess the likelihood of a 20% response rate, or 20% of all consumers participating in the promotion.

Over-redemption insurance is a game-changer for businesses looking to secure their financial risk. Securing the financial risk of sales promotion and customer loyalty campaigns is a major benefit.

This type of insurance is ideal for large or small brands alike. It allows you to work within your budget to achieve a bigger and more exciting promotion.

One of the key advantages of over-redemption insurance is that it helps you stretch your promotional budgets for maximum market impact. This means you can get more out of your marketing efforts without breaking the bank.

Here are some of the benefits of over-redemption insurance at a glance:

By having over-redemption insurance, you can enjoy peace of mind knowing that you're protected from financial risk. This allows you to focus on running successful promotions without worrying about the potential costs.

Our risk management approach is designed to protect your business from financial risks associated with sales promotions. With our innovative risk-managed sales promotions, we drive engagement from your target market.

We establish a forecast redemption level in partnership with your brand, taking into account our extensive experience in running sales promotions. This allows us to provide a fixed fee per product.

Our specialist over-redemption insurance covers the cost of any claims over our predictions, giving you the reassurance of your campaign's overall profitability. This means you can be bold with your sales campaign without worrying about the financial risks.

We cover any financial risk associated with higher than expected claims, allowing you to focus on driving sales and engagement. Our fixed fee per product structure provides a predictable and stable outcome for your business.

A food company renewed one of its brands and created a promotion to boost sales. They printed 300,000 coupons and expected 10% of customers to use them, resulting in 30,000 units sold at a discounted price of 1 eurocent each.

The promotion exceeded expectations, with 38% of customers using the coupons, leading to 84,000 more units sold than anticipated. This resulted in an additional 167,160 EUR in lost revenue for the company.

The company had taken out over-redemption insurance to mitigate potential losses, which paid out 1.99 EUR per product exceeding 10% of the coupon limit. The premium paid was 19,701 EUR, which covered all the losses incurred.