Introduction Credit Insurance is designed for companies selling goods and or services on credit to overseas/Domestic buyers. The policy secures the trade receivables arising out of open account sales.
Scope of Cover Our Credit Insurance policy insures Policy Holders against Commercial Risks where the buyer becomes insolvent or is simply unable to pay for goods/services received.
This cover can also be extended to include Political Risks in case of Export sales. Here, the policyholder is indemnified for perils such as political embargo, transfer delays, currency inconvertibility etc. caused by political instability in the buyer’s country.
One important asset that is vital but often overlooked is that of “Trade/Sundry Debtors”. Put in another perspective Debtors is cash to be received in the near future. Usually debtors account for about 15% to 60% of a company’s annual sales and a default by a few large debtors could at least put the organization through grave hardships of working capital crunch, cash flow problems, profitability issues, etc. and if not challenge its very existence. "Credit Insurance typically addresses and tries to mitigate risks to this class of assets"
Benefits 1.Balance Sheet Protection: Credit Insurance acts as an effective tool in minimising your bad debts. Trade losses which can destabilize the company’s balance sheet are avoided.
2.Facilitated Access to Financing: If you are looking to finance your receivable at competitive rates.
3.Competitive advantage: Flexbility in the credit terms offered to existing and prospective buyers , thereby helping to capture the market.
4.Profitability: Provides early warning on the possibility of a default, allowing the seller time to withdraw from the relationship in a structured manner and Avoidance of weak buyers , with focus on profitable buyers & markets.
Exclusions It does not cover a company on the following
Sales to subsidiary & associates
Sales made against cash advances or confirmed letters of credit
Genuine Trade Disputes
Sales to individuals for non commercial use
Pre-shipment risk
Consequential losses or interest on late payment
Nuclear explosions & contamination
Loss arising directly or indirectly due to war between two or more of the following countries: France, China, Russia, the United Kingdom and the United States of America
Features Whole Turnover policy - The total Turnover of a Company/Product Line/Division is considered excluding sales under L/Cs and Advance. Policy Premium: Policy Premium is based on the projected turnover. The premium is determined taking into account the countries in which exports are made, level of trade losses in the portfolio, risk factors of the sector. Indemnity: upto a maximum of 90% of the Credit limit placed or the loss incurred whichever is lower. Buyer-wise credit limits: Credit Limit represents the maximum exposure that can be taken by the seller on a buyer at any given point of time. Each buyer to be assigned individual credit limit Maximum Limit of Liability (MLL): MLL represents the maximum sum total of claims that can be paid in a single policy period which is a function of the premium paid under the policy.
Reinsurance support from COFACE, an “AA” rated Reinsurer and QBE Insurance Group of Australia rated ‘’A+’’ by S&P
Direct presence of our re-insurer in 60 countries
Common risk system, monitoring 50 million entities worldwide – we can facilitate you in expanding your trade
Simple and quick web-based technological process for approving credit-limit
Credit Limit – Hassle-free and speedy (48-72 hours)
Recovery services provided in 99 countries across the world
Customized premium calculation based on
- Rating of country & Industry profile - No predetermined rates
At ICICI Lombard we have specialists located strategically who work in sync with our Relationship teams to tailor this product and facilitate the process of seeking a right blend of Credit and Political Risk covers.
You only need to contact the closest ICICI Lombard office and speak to a Relationship Manager who shall guide you through this process.
