• Trade credit insurance, provides protection against the failure of your customer/s to pay its trade debts. This can arise because the buyer becomes insolvent or because he does not pay within the set timeframe. These risks are usually described as commercial risks.
    Companies that export can also protect themselves against a range of political risks that may prevent or delay payment. This arises when payment is not received as a direct result of a war in the buyer's country, cancellation of a contract by the government of the buyer's country, or when a government implements regulations which either prevent the export or import of the goods - or prevent or restrict the transfer of hard currency - from the buyer's country.
If you are selling your products and services on credit terms to domestic or foreign trade partners, or financing such transactions (currently restricted by Insurance Regulatory and Development Authority), non-payment is part of the risk of doing business.

There are many benefits :

  • Prudent credit control system and protection against catastrophic bad-debt losses.

  • Better risk management through an early warning system monitored by the Insurance company.

  • Better business planning by eliminat ing unknown risks.

  • Improved working capital from your Banks because you have enhanced the quality of your accounts receivable with trade credit insurance.

  • Better sales targeting, due to information provided by the insurance co. that can be used to target new customers and markets and monitor existing customers.

  • The benefit of Insurance company debt collection capabilities and network.

  • It is similar to any insurance concept – including life. Just because you hadn’t had any past bad debts, does not mean you wont have it next 12 months. Protection from bad-debt losses is just one of the benefits of trade credit insurance. When your receivables are insured, you can also :

  • Safely expand sales.

  • Secure better borrowing terms with lenders.

  • Monitor the buyer quality / ratings.

  • It is similar to any insurance concept – including life. Just because you hadn’t had any past bad debts, does not mean you wont have it next 12 months. Protection from bad-debt losses is just one of the benefits of trade credit insurance. When your receivables are insured, you can also :

  • Safely expand sales.

  • Secure better borrowing terms with lenders.

  • Monitor the buyer quality / ratings.

  • No, no insurance program allows antiselection of the buyers. More importantly sitting in local market, it is virtually impossible to monitor the entire range of your buyer set. More specifically, no one can accurately predict when a company may fail. Insurance company underwrites the risk on a whole turnover basis.

    The level of indemnity typically ranges from 80%-90%; however, the level varies depending on the policy you select, industry you operate in , your credit management experience, your accounts receivable portfolio, and past bad debts.

    For the most popular policy, the premium is calculated on a percentage of your sales. Each policy is priced on a premium rate agreed at the beginning of policy period. The premium rate takes into account of a number of factors :

  • The type of industry you operate in.

  • The turnover to be insured.

  • The countries you trade with.

  • The number of customers that you have.

  • Any bad debt experience, etc.

  • Sector profile.

  • You can purchase credit insurance for (some of the products are only available from ECGC) :

  • An entire accounts receivable portfolio.

  • A group of (generally larger) named customers.

  • single buyer policy.

  • Risks on a single contract.

  • Multi Buyer Policy (export).

  • All policies have a waiting period after default is reported and before a claim can be filed. This can be as short as 150 days from the invoice date, but can be longer under certain policies.

    Claims are typically admitted within 60 days of receipt of a complete and satisfactory proof of loss and supporting documentation. At the time of a claim approval and payment, the insured must sign a release and assignment form assigning the debt for collection.