Although “Policyholder A” have completed several successful transactions since the past 2 years with “Buyer B”, they are not immune to the unexpected.
Allianz Trade in Middle East provided “Policyholder A” a 1,000,000 USD Credit limit to protect their loss from a non-payment by “Buyer B”. Suddenly “Buyer B” faced cash-flow issues following the sharp price decreased of the raw materials provided by “Policyholder A”.
“Buyer B” was unable to pay “Policyholder A” and claimed for a discount to compensate the price volatility of the raw materials. “Policyholder A” refused to grant the discount as the contractual terms were clearly agreed between both parties.
Without a trade credit insurance, “Policyholder A” would have suffered 1,000,000 USD loss including 15% VAT.