The global economy and international trade are constantly evolving bringing new economic pressures with the risk of insolvency and defaults. Protect your business from these risks with our tailored trade credit insurance solutions.
What is trade credit insurance?
Trade credit insurance provides indemnification for the non-payment of trade receivables, thereby enabling sales growth without a corresponding increase in risk.
Trade credit insurance can also enable a company to secure more favorable financing terms, as insured accounts receivable may be used as collateral and can support securitizations, receivables purchase and supplier credit/payables programs.
Trade credit insurance can enhance credit risk management by using the credit information, risk monitoring and debt collection services insurers provide. The use of credit limits, underwritten by insurers, helps an insured monitor its debtor risk. This helps the company manage its sales policy by enabling it to focus on creditworthy customers, appropriate payment terms and security conditions. Trade credit insurance claims payments improve cash flow uncertainty.
There are several ways a company can use trade credit insurance to protect its business. Trade credit insurance can*:
- Outsource the credit analysis to the insurer, providing comprehensive ground-up cover and cash flow replacement (whole turnover)
- Use insurance to support in-house credit management standards and processes supported by significant risk retention to align interests between insured and insurer and providing balance sheet protection (excess of loss)
- Insure selected or single risks based on acceptable spread of risk or large concentration on certain buyers or sectors, provided the selection criteria are not too limited or adverse
