Del Credere Agency

Auction houses have an interesting tightrope to walk. They have to guarantee the price to the sellers they represent when they receive a bid and are required to receive the funds from the bidder and pursue them if they default—all of this even though the auction house itself has no interest in the items being sold other than their commission.

The scenario where a broker or agent also acts as a guarantor within a transaction between two other principals is termed a “del credere agency” relationship. Think: "With credibility."

Sotheby’s sold a Keith Haring painting for $6.5 million in February 2018 to Anatole Shagalov, who stiffed them. Sotheby’s subsequently sold the painting to another party for $4.4 million, but is still on the hook for the $2.13 million difference, for which they are suing Shagalov.

Not a pretty nor del credere situation.

In the insurance industry, agents will sometimes enter into a del credere agency relationship with a client that may have a good credit rating, but has had some interim difficulties that have yet to be resolved.

In Credere We Trust. It's on the currency at InsuranceLand, the safest place on Earth.