Your insurance premium is based on the estimate you provide us for the value of insurable sales over 12 months.
However, at the end of the policy period it’s likely that your predicted and your actual insurable sales are two different numbers. In a Turnover Declaration, you tell us the true value of your insurable sales and we use this to calculate the exact premium due for the previous year.
At the beginning of your Policy, we charge a premium based on your expectations for business in the coming year. But your actual sales could be more or less, depending on how the business has performed in that time.
If your sales are higher than expected, we will have covered a greater value than forecasted and we will send you an invoice for additional premium. If your sales are lower, then we will have covered less than expected and will reimburse part of your premium, capped at the minimum premium specified in your Policy Schedule (usually 90% of expected premium).
For example, let’s say your expectations for business next year are £20 million and your premium rate is 0.2%, so your premium is £40,000 premium. Your minimum premium would be: £40,000 x 90% = £36,000.
A Turnover Declaration is important because it helps us calculate the true value of your Policy, so you pay a fair price for cover. Because of this we must receive completed declarations in order to continue providing credit limits and settling any claims.
Your Policy Schedule will tell you if you need to complete a form and we will send it to you when it’s time to do that.
Not all businesses have to complete a Turnover Declaration: for example,companies on fixed premiums don’t. These are generally smaller businesses that do not trade in international territories.
Towards the end of your policy period, you will be sent a Turnover Declaration form. You will need to return this within 60 days (or 90 days for a Contractor policy). Your Policy is at risk if declarations are not provided.
The form is relatively simple, but it’s important to complete it properly with all required information. You just need to enter the insured turnover you have achieved against each country you do business with. Insured turnover refers to sales covered by your premium. It’s not necessary to include uninsured sales such as cleared funds on or before delivery, government contracts or business with organisations we haven’t covered.
That’s any sales not falling under your Policy; for example non-credit transactions, sales to your subsidiary or associate companies, business with the UK government and sales to other public customers (unless we have expressly covered these).
You can also leave out sales made to an insured customer after your cover has been refused or withdrawn.
VAT should not be included unless specifically covered under your Policy, and you can leave out sales secured by a Confirmed Irrevocable Letter of Credit. If your Policy does not include political risk cover, you may also omit unconfirmed Irrevocable Letter of Credit business.
We all make mistakes, and while we have taken great pains to make our Turnover Declaration forms as simple as possible, there’s always a margin for error. To help you avoid mistakes, here’s a list of the most common errors we see in returned forms:
