Trade Credit Insurance Coverage
Political Risk coverage is not available for domestic trades. As a result, if your trade activities are solely domestic, meaning all your buyers are located within the same country as your business, you would not be eligible for Political Risk coverage.
Additionally, there might be restrictions on offering Political Risk coverage in certain countries where we have observed a significant deterioration in the political environment. This cautionary measure is taken to ensure the soundness and sustainability of our coverage offerings.
Our policy is designed to primarily cover Commercial Risks arising from Insolvency or Protracted Default of private companies. Government buyers, on the other hand, are not susceptible to insolvency, making them ineligible for coverage under our current policy structure.
Though delays in payments may occur from government buyers, such delays are typically not the result of financial distress that would render them incapable of honoring their payment obligations. As a result, we are unable to extend coverage to government entities under the current scope of our policy.
Off-coverage comprises the following scenarios:
- Goods delivered or services rendered in a country not specified in the special terms of the policy.
- Receivables owed by companies in which you have ownership or significant control.
- Receivables related to trades that do not fall within the defined trade terms stated in the special terms of the policy.
- Losses arising from receivables owed by Sanctioned Companies or Sanctioned Individuals.
- Receivables owed by Public Buyers or Government Entities.
- Receivables owed by individuals (i.e., not companies).
Our Trade Credit Insurance policy is designed with a fundamental principle in mind – the Insured must act as though they are uninsured. This means that there is a Shared Risk element in our coverage, ensuring that the Policy Holder actively pursues the debt owed by the buyer. As a result, the policy includes coverage for a portion of the receivables, typically 90%, leaving a 10% amount that the Policy Holder is responsible for chasing and managing independently.
By incorporating this Shared Risk approach, we encourage you to remain proactive in debt recovery, promoting responsible business practices and fostering a mutually beneficial partnership between the insured and the insurer.
When we assign a partial limit, it indicates that we have identified reasons to advise our clients to exercise caution and limit their trade with that specific buyer. Overtrading with such buyers is not recommended, as it could potentially worsen the buyer's financial situation, leading to further deterioration due to excessive trade volumes that they are unable to sustain.
To address the higher risks associated with the partial limit, we charge based on the turnover specifically attributable to that buyer. This approach reflects an effective higher rate to account for the increased risk exposure.
We strongly advise all our clients to adhere to the Permitted Limits specified under the Policy for their own financial well-being and to ensure a balanced risk management strategy. Following these limits helps safeguard against potential losses and supports a stable and sustainable trade environment for your business.