How much does trade credit insurance cost?​

At Allianz Trade, all policies are tailored to the needs of each business. Therefore, the trade credit insurance price you pay will likely differ from other companies.

However, if you’d like a guide price idea of how much it costs, you can calculate a trade credit insurance premium based on a percentage of your sales, often called the rate on turnover. This is generally a fraction less than 1%.

For example, if your sales amounted to £4 million last year and you wanted to cover that entire amount, the premium would usually be less than £13,500.

If your turnover sits under that threshold, our Simplicity policy is built specifically for businesses your size, with fixed premium bands and a shorter application.

This guide price covers the premium itself. Your total cost includes Insurance Premium Tax on the premium and VAT on the service fee element, which aren't included in the premium figure above.

Your insurance premiums are based on various factors, such as:

• Your industry
• Your annual revenue
• The financial history of the business, including any bad debts
• Current internal credit procedures
• Your customers’ creditworthiness (The risk associated with all of them, if there’s a mix. See our customer credit checks guide for how this assessment works.)

• Where you’re doing business

• If you export and require political risk cover (our export trade credit insurance page details what this includes)The type of policy you choose

When you contact our team, we’ll provide you with an accurate cost for a policy designed to cover your specific business needs.

When providing a trade credit insurance price, our team will always consider your financial history. However, it’s important to know, if your history shows a high number of defaults by clients, it doesn’t necessarily mean you’ll have a higher trade credit insurance premium.

Many factors are taken into account, including some that can outweigh a poor receivables history such as market outlook for your industry and future demand for your products.

You can do a few things to bring your premium down without reducing the protection that matters most to your business.

• Tighten your credit control before you apply. Insurers reward businesses that can show they already manage risk well. Our guide to credit control covers what a solid process looks like.
• Keep your claims history clean. If you file a claim for every late payment, rather than resolving smaller issues directly with the customer, you can push your premium up over time.

For some, trade debts can make up a notable share of a business’ assets, so a missed payment can have a huge influence on cashflow and working capital. Protecting this income can prove invaluable. The Association of British Insurers has more on how trade credit insurance works across the industry.

If you're already chasing a payment that's overdue, our guide to late payments covers how to collect it, though insurance means you're covered before it gets to that point.

A  trade credit insurance policy can often also offset its own cost many times over, even if you never make a claim. Trade credit insurance can help securely extend more credit to current customers or pursue new, larger customers that would have otherwise seemed too risky. Therefore, you can grow your business without taking on additional risk.

The example above shows how this works out for a business managing three customer credit decisions with and without Allianz Trade.

• Without cover, a cautious business either turns down business it can't properly assess or takes it on risk blind. Here, the outcome is a mix of missed opportunity and real loss: one customer's credit limit was approved and delivered £20,000 profit, a second was declined outright due to insufficient information, and a third defaulted for £50,000 after financial difficulties went unnoticed.
• With Allianz Trade's insight into each customer's creditworthiness, there’s a real difference. The same first customer's limit was approved at a higher level, adding a further £20,000 in profit. The second customer, previously turned away, was approved for a partial limit instead of nothing, adding £10,000. And the third customer's declining financial position was flagged in time, avoiding the £50,000 loss entirely.

So, added together, that's £80,000 in net profit gained across just three customer decisions. That's the kind of impact that can come from simply knowing more about who you're extending credit to.

The average cost of trade credit insurance is never the same. Ask five different businesses what they pay and you'll get five different answers. Your industry, your customers, and how tightly you already manage credit risk all factor into the number. The £80,000 example above shows what that number can return.

What's consistent is the return: businesses that ensure their receivables tend to extend more credit with more confidence, catch problems before they become losses, and free up capital that would otherwise sit in reserve against bad debt.

You may decide to invest in trade credit insurance if you're looking to:

• Expand sales with confidence, whether selling more to existing customers or pursuing new customers.
• Access better financing terms, as banks tend to lend more capital against insured receivables.
• Make your best possible business decisions by quickly accessing your trade credit insurer’s information risk data.
• Protect against non-payment and catastrophic loss.
• Expand into new international markets, backed by protection from unique export risks and the market knowledge to make accurate growth decisions.
• Reduce bad-debt reserves, freeing up capital for other areas of the business.

If you'd like an accurate cost for your business rather than a general guide price, get in touch for a free consultation, or try our trade credit insurance price calculator for an instant estimate.