What Is Credit Insurance?

Business credit insurance covers a company’s accounts receivable, which typically represent more than 40% of a company’s assets. This protection insures against unexpected bad debt losses outside of the insured’s control due to commercial and/or political risks, such as insolvencies, protracted default, repudiation, acts of war and government regulation or restrictions. Commercial Risk

    • Insolvency– Includes court protection such as Chapter 11 in the U.S. or Companies’ Creditors Arrangement Act in Canada
    • Protracted Default– Unpaid invoices 90 days past due date
    • Repudiation– Refusal to take up goods shipped and delivered as per contract

Political Risk

    • Inconvertibility
    • Contract frustration as a result of government action
    • Public Buyer Default
    • Act of war (other than wars between the five super powers: China, France, Great Britain, Russia and the United States)
    • Government regulation or restrictions

Why Insure Accounts Receivable?

Accounts receivable are often a company’s only uninsured asset, yet they are one of the most vulnerable to loss and are more likely to be affected by business cycles.  They provide the cash flow – the lifeblood – for a business and usually represent the highest cost to maintain (funded through bank borrowings and cost of delinquencies).

Benefits of Credit Insurance

        • Reduce your credit risk and improve financial planning by:
          • Strengthening your balance sheet to avoid unexpected losses
          • Securing your company’s cash flow by reducing bad debt
          • Forecasting bad debts more accurately through buyer monitoring
          • Using credit insurance in conjunction with your risk management practices
        • Safely expand sales, both domestically and abroad
        • Allows your company to compete and extend credit
        • Gives a business the ability to extend credit higher than bank lending, and it is insured
        • Protection from profit erosion from late payments and bad debt losses from buyers who are unable to pay
        • Supports credit management practices
        • Enhances financing while reducing the costs of borrowing
        • Taps into the extensive international risk database for over 160 countries backed by knowledgeable underwriters
        • Covers any work-in-progress to protect against the insolvency of a buyer for which you produce customized goods

Connect With Us

If you have any questions about how credit insurance can help, please let us know!


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Phone: 215.860.1900  |  Email: trgadmin@traderiskgroup.com

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