Trade credit insurance, business credit insurance, export credit insurance, or credit insurance is an insurance policy and a risk management product offered by private insurance companies and governmental export credit agencies to business entities wishing to protect their accounts receivable from loss due to credit … The Trade Credit Insurance provides protection for clients against accounts receivable losses. Companies that sell goods or services on credit terms are highly exposed to the risk of non-payment due to customer insolvency, protracted default and political risks that prevent the buyer from fulfilling its payment obligations.

What is Trade Credit Insurance?

• Trade Credit Insurance indemnifies the policyholder for the invoice value of goods delivered to a customer but unpaid due to the customer’s insolvency or default.

• Policies are written on a 12-month basis, covering goods delivered to customers during the policy period.

• Premium is charged as a rate on sales or a rate on approved limits.

The policy features risk-sharing in the form of a self-insured retention and/or coinsurance.

Who Buys Trade Credit Insurance?

• Any company that sells goods and services on credit terms (i.e., extends credit to customers rather than requiring payment up front) and is exposed to the risk of non-payment.

• Large, medium and small commercial enterprises.

• Subsidiaries or divisions of Multinational companies may buy coverage for different regions or product lines locally, or under a coordinated global program.