Trade Credit
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- Sample Headings
About TCI – Trade Credit Insurance
- What is TCI? (Click on Every points should be get breif explanation as below mentioned Contents)
- Basic Coverages.
- Add On Coverages.
- Claim Process Support.
- Free Consultation for the TCI Product.
What is TCI?
Trade credit insurance is an exclusive insurance policy designed to protect businesses from non-payment of commercial debt.
It is a reimbursement guarantee provided for firms if the buyer fails to pay within the agreed credit period.
Instances of non-payment could arise due to a buyer’s bankruptcy, insolvency, delay, default, or any other unexpected geopolitical occurrences. This could hamper the financial health of businesses and even pose a grave risk to their existence.
With trade credit insurance in place, businesses can access most of their outstanding payment amount (75%-95% of the invoice amount) at the specified time through the trade credit insurer. This ensures that their cash flow isn’t interrupted, further enabling them to grow safely.
This type of insurance is also commonly referred to as export credit insurance, debtor insurance, and accounts receivable insurance and is a subset of international trade finance.
Basic Coverages.
Trade credit insurance typically covers several key areas:
- Non-Payment Risk: Protection against losses from buyers defaulting on payments due to insolvency, bankruptcy, or protracted default.
- Political Risk: Coverage for non-payment caused by political events like war, expropriation, or changes in trade regulations affecting the buyer’s ability to pay.
- Commercial Risk: Insurance against the risk of non-payment from buyers due to economic difficulties or cash flow issues.
- Pre-Export Risk: Coverage during the period from when a sale is agreed until the goods are shipped, protecting against buyers not paying after shipment.
- Credit Management Services: Assistance in evaluating and monitoring the creditworthiness of buyers, and managing collections and recoveries.
These coverages help businesses manage their exposure to bad debts and ensure financial stability.
Add on coverages
Add-on coverages for trade credit insurance policies can enhance protection beyond the basic coverages. Common add-ons include:
- Extended Coverage: Protection for risks not included in the standard policy, such as certain types of buyers or transactions.
- Political Violence: Specific coverage for losses due to acts of terrorism, civil unrest, or similar political violence.
- Short-Term Credit: Coverage for very short-term credit risks, typically less than six months.
- Supply Chain Risk: Insurance covering losses due to disruptions in the supply chain impacting the insured’s ability to fulfill contracts.
- Receivables Financing: Coverage that supports financing arrangements where receivables are used as collateral.
- Buyer-Specific Coverage: Additional coverage for specific buyers who might pose higher risks.
- Fraud: Protection against losses resulting from fraudulent activities by buyers.
- Top-Up Coverage: Additional cover for amounts exceeding the standard policy limits.
These add-ons can be tailored to the specific needs of a business, offering more comprehensive protection against various risks.