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Secure Your Business with Affordable Credit Insurance
When insuring your accounts receivable, your insurer will evaluate several factors to assess risk and determine pricing. They will assess the risk based on trading history, your customer ratings, credit terms, loss history, business sector, and customer location. Additionally, the need for non-cancellable credit limits and whole turnover cover will be further evaluated.
Insuring accounts receivable differs from other insurance policies in terms of pricing structures and overall cost. As with most insurance policies, the price is calculated against risk and specific requirements, making each policy unique. Factors influencing the cost include the specific risk profile of your business and the amount of risk share you are willing to retain
Pricing is based on many different factors, including:
The pricing calculation is based upon a small percentage of your annual sales and adjusted dependent upon these additional factors.
This is where the pricing calculation begins. Referring to the total amount of money taken in by your business over a specific period. It is a critical factor in determining the premium for your accounts receivable insurance. As the premium baseline will be set by analyzing the amount of money taken by your business in a given timeframe.
The history of your business will be analyzed as well. Your track record with your trade partners and receivables history will be evaluated. A poor trade history does not necessarily lead to higher premium pricing.
There are many mitigating factors that can determine overall cost such as market outlook and future demand for your products and services as these may lead to future stability.
Another major factor in trade credit insurance cost is the sector or industry that you do business in. If you do business in sectors with higher stability, this can help to lower your premium rates.
The overall market volatility, seasonality, and outside market influences on your industry will be considered when determining business protection premium cost.
When determining policy pricing, your existing credit lines with your trade partners will be evaluated. Both the amount of credit extended and the terms of repayment are crucial factors in setting policy pricing. This assessment helps insurers understand the level of risk associated with your accounts receivable.
The benefits that comes with most trade credit insurance policies is that your insurer will help you determine future credit lines with your trade partners. Credit insurance agencies will provide expert analysis that allows you to be more informed about how different amounts of credit impact your overall exposure.
Your primary trade partners will be evaluated for their creditworthiness and trade history as part of your trade credit business protection. This evaluation is typically based upon publicly available information. With a comprehensive assessment that will analyze financial health, payment behavior, and overall reliability in fulfilling trade agreements.
By leveraging credit reports, financial statements, trade databases, and news articles, we will gather detailed insights without alerting the trade partners to the evaluation process. This approach ensures that you can make informed decisions about your trade relationships while maintaining confidentiality and minimizing potential biases.
Your trade credit insurance pricing will also take into account the countries where your customers are located. Factors such as the state of infrastructure, political stability, and international conflicts in these nations can significantly influence premium costs. For instance, robust infrastructure and stable political environments may lower premiums, while regions experiencing political turmoil or conflicts may lead to higher costs due to increased risk.
This comprehensive approach ensures that the pricing accurately reflects the varying levels of risk associated with different geographical locations, providing a tailored and precise insurance solution.
All trade credit insurance agencies have different methods for structuring their policies and premiums. Below, we will explore our policy structure to help you understand one approach to trade credit insurance pricing.
Our Modula Policy allows us to provide you with credit insurance tailored to your requirements, so you don’t have to pay for something you won’t need. Atradius Modula is ideal for businesses with a turnover in excess of $5 million. We also offer policies for larger and smaller businesses, but for the purposes of explanation, we will use our Modula policy as an example.
Within the Modula policy are a diverse set of options or “modules” to suit your needs. These policy components provide coverage for the factors discussed above. These modules function as “building blocks” of cover. We use the “building blocks” we need to construct your policy.
This can be particularly useful when operating several policies to cover your different customers or markets.
Modula allows for varying levels of risk and need between customers to be clearly identified and differentiated. Providing a single policy promotes standardization and clarity, while the individual modules allow for a custom fit and a policy suited to each individual need.
These building blocks inform your final trade insurance premium cost and make pricing decisions clear.
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Atradius is the global leader in trade credit insurance policies. Explore our full range of products and services in Our Solutions.
Designed for larger businesses, this credit insurance policy covers both domestic and export trade.
This can be particularly useful when operating several policies to cover your different customers or markets.
Atradius Modula allows varying levels of risk and customer needs to be clearly identified and differentiated. A single policy provides consistency and clarity, while individual modules enable a tailored approach suited to specific requirements.
Atradius offers flexible trade credit insurance to protect your business against bad debts, improve cash flow, and expand into new markets with confidence.
Multinational businesses operating across multiple locations benefit from a service that combines global view with local market expertise. This approach ensures consistent credit insurance support while addressing regional differences and risks.
Atradius Global is a specialist team focused on the trade credit insurance needs of multinational businesses. It provides a more personalized approach to multinational credit insurance, offering a level of service that is distinctive within the credit insurance industry.
Atradius offers global credit insurance for multinational businesses, providing risk management and local expertise across markets worldwide.
Credit Specialties provides the best of both worlds for our policyholders. It enables your business to benefit from our expertise and data intelligence as a world leading credit insurer, as well as the enhanced flexibility and innovation of our political risk market products. Our Credit Specialties policy wording is tailored to meet the needs of individual risks and to respond to the evolving economic and geopolitical environment.
From non-cancellable cover to long-term projects our Credit Specialties solutions are unique. We have designed our policy to cover things like catastrophic events and political situations that arise outside of your control.
Atradius Credit Specialties offers tailored solutions for trade and political risks, with flexible coverage for large contracts and structured financings.
Atradius GO is a new trade credit insurance product for small and medium business enterprises looking to protect their receivables at an affordable price.
Perfect for SMEs, this policy is for domestic trade only and covers normal trading receivables exposure up to $200,000.
Atradius Go is for small to medium size businesses looking to protect their accounts receivable at an affordable price.
The Atradius Media Policy is designed for the unique needs of the media and marketing communications industry.
Whether you’re a major media owner or a small specialist design business, the impact of suddenly being exposed to bad debt could be devastating and can take even large organizations to the brink by starving them of vital funds.
Do You Have Questions About Trade Credit Insurance Cost?
The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms.
Nothing herein should be construed to create any right, obligation or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person.
Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.