Credit Insurance policies are becoming a ?must have? commercial protection for businesses looking for ways of administering credit risk. To understand the utility of such an insurance package, we have to get a reasonable understanding of the various risks that a commercial enterprise has to deal with in the normal course of all business transactions. The credit risk can be present on business receivables in international commercial transactions or even on the completion of local sales deals. This is because most of the business sales deals are undertaken on credit and the terms for repayment range from a few days to a couple of months in select industries.



Given the nature of such commercial transactions there are some risks that the enterprise that has supplied the goods or services must deal with. Some of the common risks associated with global commerce are the risk of overdue payments, the risk of repeated delays in realizing the payment from some customers and the risk of the customer going back on the commitments made at the time of the sale. You cannot expect to get credit insurance packages for other sales risk like the customer refusing to accept your goods on the grounds that it is defective or for some other valid reason. Credit insurance also does not extend cover to sales transactions that are disputed by either entity in the transaction.

Credit Insurance is therefore most effective when you negotiate the details of the applicability of the insurance cover in advance with the insurance provider. Some providers of insurance cover try to introduce some restrictive clauses to reduce the effectiveness of export credit insurance packages. This makes it all the more important that you choose a good Credit Insurance Broker for your company credit risk insurance deals. It is also advisable to negotiate a detailed terms of reference as an appendix to every company credit risk insurance cover that you go in for. This will help you to get your claims processed more quickly in the event that you have to activate the insurance cover.

With the global financial crisis, credit insurance cover is becoming more difficult to obtain and many companies are having their cover cancelled or premium massively increased. Whilst many of the biggest underwriters in the world such as; Atradius, Euler Hermes, AIG, Coface and Ducroire continue to offer credit insurance protection, the terms can vary dramatically which is why it is vital to use an independent credit insurance broker to find the best deal. Credit insurance brokers have dedicated advisers who are aware of the international laws governing trade and commerce as well as a comprehensive understanding of the market. They also have a list of firms that are less reliable or competitive. Given that the result of a bad debt loss could be fatal for many smaller businesses, this type of proactive support from a credit insurance broker it is essential in securing export credit insurance cover.

Credit insurance brokers often offer a range of company credit risk insurance at competitive rates if you have regular transaction with a customer. The insurance premium that has to be paid is also decreased as these insurance companies build an in-house database of your transactions with the particular client. If your client is a reputed international business enterprise the company credit risk insurance cover will be granted with less restrictive clauses in the insurance agreement.