Trade Credit Insurance

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Product Features

Account Receivable Protection

Protect a large and vital business asset. This policy pays you if a customer defaults on payment. In this way it ensures a steady cash flow and mitigates an important business risk.

Market Risk Cover

Trade credit insurance covers default for several reasons ranging from political situations, currency demonetization, license cancellation or exchange rates fluctuations. Defaults by public sector units can also be insured.

Bankruptcy Cover

Trade Credit Insurance protects defaults even if your customer goes bankrupt. The reason for bankruptcy is not relevant. This is particularly relevant for a fragmented customer base that is exposed to economic cycles.

Low Bad Debt

By taking trade credit insurance policy, you will cover all the risk of default by your customers. This will ultimately keep your bad debt level low, which further helps grow the business. Remain focus on business’s core activities and don’t worry about payment defaults.

Why Claims Get Rejected?

Omission of important details

If you leave out important information in your proposal it can result in a claim rejection. Important information could be the fact that you have a history of payment defaults, a debtor has threatened non-payment or that you have debtors that are not declared in the proposal.

Late filing of claim

A common reason for claim rejection is late filing of a claim after the maximum reporting time provided for in the insurance contract. The reason for claim rejection in cases of late filing is that late filing significantly reduces the insurer’s ability to recover the funds from your creditor. Insurers price trade credit with the expectation that they will use legal and other recourse to recover at least a part of the default payment.

Risks not covered

Many claim gets rejected because they lie outside the policy terms. Terms include the definition of goods, territory and payment conditions. Certain kinds of debtors such as government departments may be excluded in the insurance.

Claim Process

Intimate the insurer immediately in case the payment is not received within the specified period. SecureNow can oversee this for you.
Complete the claim form and include information on the defaulting party. You will need to demonstrate that you have made reasonable efforts to recover the money.
Sign a letter of subrogation to the insurer. This gives the insurer the right to recover the money on its own.

Add-on Covers

Cover can be customized to include only big buyers who can create a potential risk. Add ons can include insolvency, protracted default and political risks.

Exclusions

Typical exclusions are: Non-payment arising due to cross-country trade disputes, sales to an associate company, sales contracts where payment should be received in advance, sales under irrevocable and confirmed Letter of Credit, and recovery losses due to foreign currency fluctuations.

Why SecureNow

Deep
Product Knowledge

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Cost-effective
Insurance

We work with all insurers to get you the best options- both in terms of price and features.

Quick Turnaround

Cover notes are issued within hours of request. This ensures that your goods don’t sit idle at any stage.

Strong Claim Support

We manage all aspects of your claim - from survey appointment to documentation to insurer follow-up.

Value Added
Services

We will advice you on risk management best practices.

Policy Administration
System (PAM)

See all your contracts renewal information in one place. Place service requests on PAM.

FAQs

What is Trade Credit insurance?

Trade credit insurance protects your business against both commercial and political risks that are beyond your control. It improves the quality of your business and helps you grow profitably, minimizing the risk of sudden or unexpected customer insolvency. Credit insurance gives you the confidence to extend credit to new customers and also improves access to funding, often at more competitive rates.

Can only some big buyers be insured?

You can insure debtors selectively. However, the insurer must have a clear view on all your debtors and must be clear that you are making a selection. They will want to know your rationale for selection of a few debtors. Quite often the premium rates for selective and complete cover are similar.

What kind of risks is not insured?

The credit risk that is insured has to have a direct link with an underlying trade transaction which is the delivery of goods or services. If no such direct link exists, the outstanding amount is not insurable under a trade credit insurance policy. For example you may not have a trade credit insurance cover late tax refunds by the government.

Is trade credit insurance a type of financial guarantee?

A trade credit insurance policy is a conditional insurance contract between two parties that cannot be traded. A financial guarantee is unconditional, usually on-demand, and transferable.
A trade credit insured risk is always directly related to an underlying trade transaction, which is either the delivery of goods or of services. The correct fulfillment of this trade transaction is essential for trade credit cover to exist.

Who should buy Trade Credit Insurance?

Any company that sells goods and services on credit terms (i.e., extends credit to customers rather than requiring payment up front) and is exposed to the risk of non-payment.

How the premium is computed?

The premium is calculated as a rate percentage on the amount of insured’s turnover i.e. estimated credit sales for the financial year. The policy commences only after the insured or the policy holder applies for credit limit on each buyer.