Trade Credit Insurance



Broadly defined, Trade Credit Insurance protects your business against non-payment due to the insolvency or default of your account customers in Australia and overseas.



TRADE CREDIT INSURANCE IS AN EFFECTIVE RISK MANAGEMENT TOOL

  • Protect and improve your cash-flow which is the “lifeblood” of all businesses big and small
  • Enhance your balance sheet and reduce the cost of finance
  • It can help increase sales and profitability for new and existing customers
  • Improve and strengthen management and credit control procedures



CALCULATION OF CLAIMS

All types of policies attract a deductible and an insured percentage.

Deductibles (i.e what is not covered by insurance) typically range from $5,000 to $50,000 and the insured percentage can be anywhere from 80% to 90%.



POLICY ADMINISTRATION

Reporting
The insured is required to report accounts that are more than 90 Days from end of month.

Limits
The underwriter may grant a “Discretionary Limit” (anywhere from $20,000 to $100,000) to the insured. This allows the insured to approve their own limits up to the “Discretionary Limit” based on approved procedures (e.g. 3 trade references).

Limits that are greater than the “Discretionary Limit” are investigated by the underwriter.



CALCULATION OF PREMIUM

The premium rate is a percentage, based on insured turnover, which excludes sales to government, cash sales, taxes, inter-company business and agreed debtors. When the calculating premium rate the underwriter takes into consideration the following:

  • Insurable turnover;
  • The type of industry a business trades in;
  • The number and amount of bad debts over the last 3 years;
  • The credit control procedures in place, and
  • The credit worthiness of the larger debtors and the limits required.

The premium rate is negotiated with the underwriters and can be varied by the style of policy, the size of the excess and the percentage of cover required.

Typically, higher self insurance results in a lower percentage of the debt that you want insured. This provides a lower premium rate.



TYPES OF POLICIES AVAILABLE

Knowing what type of policy your business needs is essential.

The 3 most common policies are:

Whole of Turnover
The underwriter contracts to cover all receivables.

Selected Risks
The underwriter contracts to cover the major accounts, over an agreed balance.

Catastrophe
The underwriter contracts to cover all receivables subject to a sizeable level of self- insurance.



FOR MORE INFORMATION CONTACT

Peter Ghaleb
Manager of Trade Credit Insurance
Authorised Representative (ARN 270377)
of Quanta Insurance Group
T 02 9225 5229
M 0410 912 112
peter_ghaleb@quanta.com.au



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