There are five main types of credit insurance:

• Whole turnover: This covers a client’s entire sales ledger against non-payment through default or insolvency and is structured to suit the company’s specific needs and objectives.
• Single risk: This is designed to cover a named buyer or customer and is usually applied to a policy holder’s largest account. It gives a business the confidence to pursue other opportunities, because its most significant exposure is protected.
• Catastrophe: This offers a business protection against a single major catastrophe or series of failures. It supports a business if the worst happens and total policy losses breach an aggregated excess value.
• Top-up: This provides additional cover, using a separate policy to top up a restrictive credit limit decision.
• Political: Most credit insurance policies provide cover for the commercial risks of insolvency and default. Additional cover can be negotiated to provide protection when a specified political risk frustrates the contact of sale.

Credit insurance is applicable to any business with a risk exposure as a result of trading goods and services with counterparties, whether it is an SME or a global conglomerate. It exists to give companies the confidence to trade and know when a potential new customer is worth working with.

The cost of a credit insurance policy is based on turnover. Typically, it is a small percentage of sales but several variables are taken into account including: trading history, historical debt loss, trade sector and customer base.

Credit insurance is not just about replacement of cash after a loss. It also offers an exceptionally useful way to assess the risk of trading with a new customer. A properly tailored credit insurance facility proactively identifies existing customers that might be struggling, allowing businesses to focus their time and resources on trading with strong, reliable customers.

Credit insurance provides protection against customers failing to pay for goods and services supplied. This can happen when a customer becomes insolvent or if they fail to pay within an agreed credit period. These risks are referred to as commercial risks.

On occasion, non-payment can occur when a political event or natural catastrophe frustrates the contract of sale. Cover can also be extended to cover these exposures.

Credit insurance is also a useful tool when searching for business finance solutions because it proves that a business is run responsibly.

We are members of a global network of specialist credit insurance brokers, which enables us to support the needs of clients with subsidiaries or associated companies internationally.

Whether clients need locally placed cover in local language for an overseas subsidiary or the placement of a complex multi-territory programme, Xenia and its network partners are well-equipped to support the way our clients operate today or aspire to operate in the future.