Trade Credit Insurance is Insurance of Account Receivables for trade done on open account or Clean Credit

Benefits to Insured

- Provides protection against Payment Default by Buyers due to Commercial Risk, Insolvency and or Political Risk (in case of Exports only)

- Provides Protection against Account Receivables which are 30-60% of Current Assets

- Enables one to expand business to new markets on Open Account from day one if the Buyer is approved by Insurer

Benefits to Bank or NBFC

- Benefit from Assignment of Proceeds of Claims of your Client’s policy

- By insuring your Client’s Cashflow, mitigate risk of delayed payments to you by your Client’s

- Benefit from Insurer’s ability to provide Risk Rating of your Client’s Buyers, thereby able to justify/restrict advances

Any entity who is selling goods/services to Businesses including Proprietary of Partnership Firms on Open Account can avail Trade Credit Insurance.

Yes, Trade Credit Insurance can be taken for Domestic as well Export Business. The policy operates on whole turnover basis.

Trade Credit Insurance needs to be taken on all the Buyers with whom a seller is doing business on Credit and not specific ones. There is no option for choosing specific buyers amongst the entire set of buyers. However, an insured can opt for insuring his all credit turnover from a particular segment/product/country

No, client with existing overdue cannot be covered, however once their payments are normalized then they can be covered.  

Computation of premium depends on certain parameters like Credit Period being offered, Insurable Turnover, Past Experience, and Debtor Concentration etc.

Premium charged on Insurable turnover i.e. Open Account /Credit Turnover only. Business done on Advance, LC, and TT is excluded from Insurable turnover

Some of the major exclusions are listed below

- Disputed Trade Transactions

- Countries which are not covered

- Sales to Sister Concerns or Subsidiaries or Government Department

- Expiry of Import and export licenses

- Third-country shipment

- Radioactive contamination

- War between the major powers