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Trade Credit Insurance

Trade credit insurance provides indemnification for the non-payment of trade receivables. With trade credit insurance in place, companies can generally extend more open credit to customers or enter new sectors or markets. This has the impact of reducing the risk of non-payment, thereby enabling sales growth without a corresponding increase in risk.

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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 provided by insurers. 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.

A company can choose to:

  • 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.

Areas covered

Experts provide solutions that cover non-payment of trade receivables caused by:

  • Insolvency
  • Protracted default
  • Political risk
  • Non-honouring of letters of credit
  • Non-delivery of pre-paid goods
  • Loss of pre-delivery costs

Who we serve

Through the combination of robust credit management policies and procedures with properly structured Trade Credit Insurance protection, we serve:

  • Large national and multi-national companies looking to:
    • Improve credit management
    • Open up lines of credit and expand sales markets
    • Protect cash flow
    • Enhance their balance sheet to increase shareholder value
  • Banks:
    • We represent some of the largest banks worldwide and with many transactions syndicated to other banks our work touches and impacts most major financial institutions. The trade credit insurance programs we arrange support securitizations, receivables purchase and supplier credit/payable facilities.

Why WTW?

  • The trade credit team sits within Financial Solutions (FS), which is a global broker of political risk and trade credit insurance.
  • Our London team is recognized as a market-leading specialist in large and structured excess of loss (XoL) programs.
  • We listen and invest in long-term partnerships with clients built on mutual co-operation and respect and based on aligning interests, building solid relationships at all levels.
  • We understand what constitutes best practice in credit risk management.
  • We do not impose standard solutions or wordings on our clients. We work with them to design bespoke programs and structure and adapt insurance to match their business processes and needs and to mirror their systems without imposing new or onerous costs or procedures.
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