Skip to main content
Marsh logo

Trade Credit Insurance

With Marsh’s Trade Credit Insurance, reduce the impact of client insolvency and non-payment to your cash flow and expand your client base with confidence.
Contact us

Global connectivity

Marsh Asia’s trade credit team’s local and global presence helps you expand your business across borders with confidence.

Claims expertise

Marsh Asia's experienced trade credit claims team secured over US$100 million payment in client claims in 2022.

Analytics capabilities

Marsh’s proprietary benchmarking and analytics can help ensure optimal structure and coverage for your business objectives.

Amid today’s volatile business environment, Trade Credit Insurance is not only a necessity for companies, but the right coverage must also be geared towards helping the businesses meet their strategic objectives while offering prompt support when claims arise.

 

Types of Trade Credit Insurance programs

A wide spectrum of coverage options are available from the global market. From covering your company’s entire trade receivables portfolio under one policy via whole turnover insurance to safeguarding exposures related to selected customers via key-buyer cover insurance, Marsh Asia’s trade credit team can help you identify the relevant solution based on your unique business strategy, risk tolerance and the current market conditions in your industry of business.

Whole turnover insurance

The most common policy type, which covers a company’s entire trade receivables portfolio under one policy, insuring a wide range of domestic and export transactions.

Multi-buyer/Key-buyer insurance

Covers credit sales to an agreed selection of a company’s largest customers with credit limits provided on a non-cancellable basis.

Single-buyer insurance

Provides cover on credit sales to your single largest customer in your portfolio only. A default from this single exposure may have catastrophic impacts to your business.

Top-up Cover insurance

Provides additional cover over the primary insurer when they are unwilling or unable to provide the full amount of cover required, or where it is more appropriate to share the risk.

3 key considerations in choosing the right Trade Credit Insurance cover

In seeking the appropriate Trade Credit Insurance coverage with competitive terms that suit your business’s unique needs, it is advisable to speak to an experienced and independent risk advisor with in-depth understanding of your local market and industry, and innovative solutions to help you formulate the right structure for your business. 

Here are some key considerations to keep in mind when selecting the appropriate Trade Credit Insurance cover:

Business strategy

Your business strategy shapes your growth objectives, risk appetite and outlines your approach to maintaining financial stability. Trade Credit Insurance, with its full spectrum of solution offerings, can be integrated as a strategic tool to help you navigate the uncertainties of global trade while supporting your overarching business goals. 

Risk tolerance 

Risk tolerance plays a crucial role in determining the extent to which a business might utilise Trade Credit Insurance. The integration of Trade Credit Insurance into a business's risk management approach can be adapted to both high and low risk tolerance thresholds. Regardless of risk tolerance, Marsh’s trade credit solutions offer a way to tailor risk exposure to an acceptable level through the various scope of coverages, enabling businesses to pursue growth while safeguarding against credit risks.

Current market conditions

Prevailing market conditions play a crucial role in determining the level and type of Trade Credit Insurance coverage you should choose. It is essential to regularly assess these conditions and work with an experienced trade credit solutions specialist to tailor your coverage to match the evolving risk landscape.

Our proven track record

selected option

A multinational office technology solutions company has independently managed policies with no group view of terms, and faced credit limit issues across existing policies. 

Marsh Asia reviewed the insurer’s capability of offering a program with local credit limit underwriting support, harmonisation of policy terms, and online systems to improve overall back-office information management on credit risk exposures, providing the client with consistent policy terms, improved credit limit cover and a reduced cost. 

A leading steel manufacturer and supplier suffered a delay and subsequent halt in a buyer’s payments and made a claim. However, the client had not taken any written balance confirmation on the outstanding debt, and had made sales beyond insurers’ approved credit limit, which made their entire claim appear non-admissible initially.

Marsh Asia worked with the client and insurer to understand the situation, and recommended several methods to secure the payment. The claim was settled at 85% indemnity within the timeline stipulated by the policy as a result of Marsh Asia’s timely intervention and recommendations, reducing the losses in the client’s books.

A leading crop protection company is required to provide extended open account repayment terms (365 days) to their customers but has an existing insurance coverage with low limit approval rates. 

Using Marsh Asia’s proprietary benchmarking and analytics tool MiCredit, Marsh was able to secure better terms and conditions and significantly improve the client’s limit approvals. The client obtained more durable and flexible coverage via discretionary credit limit authority — allowing them to approve customer credit limits using their own credit procedures (below a certain threshold) instead of having to rely on the insurer.

Get in touch with our representative today and receive 5 free credit limit assessments on your clients.

Contact us

In Marsh Asia

>80

Trade credit specialists with local language capabilities

>1.5K

Trade Credit Insurance clients 

>20

Industry specialist teams

Learn more about how Marsh Trade Credit solutions can safeguard your assets and enable the success of your business. 

FAQs

Trade credit insurance protects a company’s account receivables by providing coverage for a business if a customer does not pay for goods or services. It supports a company’s ability to extend credit terms (typically short term, due within 12 months) to new and existing customers and improves access to additional funding against accounts receivables.

Trade credit insurance is for companies, financial institutions, and any business offering goods or services on credit terms to another business. It compensates a company for the defined financial loss suffered as a direct result of an insured event, such as insolvency, continued payment default, or a political event. It is a tool used to effectively outsource some parts of credit management, or as part of a credit management strategy that transfers credit risk to insurers.

Trade credit insurance is suitable and of benefit to all types of businesses – irrespective of size, sector, or whether trade is domestic, export, or both. Corporations, financial institutions, and any other business offering goods or services on credit terms to another business should consider obtaining trade credit insurance. It protects your company from domestic default, as well as default by international buyers. For entities that operate on a financial basis that does not necessarily include immediate payment, trade credit insurance provides protection for a company’s assets as business activity scales upward.

Business types that commonly elect trade credit insurance include manufacturing companies, commodity traders, and service providers.

International trade between countries creates and moves the global economy. The flow of goods and services, and prices, can be influenced by a number of factors, including:

  • Global events: The ongoing COVID-19 pandemic has slowed, curtailed, and even halted the production and delivery of many goods and services.
  • Currency exchange rates: This is a key influence on net importers, who benefit from strong currencies, and net exporters, who benefit from weak currencies.
  • Trade barriers: This can include, for example, import quotas and tariffs imposed by governments to protect domestic industries from foreign competition.
  • Geopolitical stability and political unrest: Internal and cross-border conflict and war can disrupt trade routes and transport.
  • Transport costs: This can be influenced by many factors, most notably the price of oil.

Trade credit insurance provides protection against the non-payment of a valid debt by the insured company’s buyer. This coverage usually applies to certain defined events (also termed causes of loss or insured perils).

Trade credit insurers will generally cover two types of risk:

  • Commercial risk: The risk that your customers are unable to pay outstanding invoices because of financial reasons (for example, declared insolvency or protracted default).
  • Political risk: Non-payment as a result of events outside of your or your customers’ control. These can include political events (wars, revolutions), disasters (earthquakes, hurricanes), or economic difficulties, such as a currency shortage restricting the ability to transfer money owed from one country to another.

Trade credit insurance supports your ability to extend credit terms to new and existing customers, thereby helping your business grow safely where previously you may have deemed it too risky. It also protects you against the risk of exporting overseas and reduces uncertainty.

Having trade credit insurance coverage can improve access to additional funding against your accounts receivable, as banks are typically more likely to lend more capital to a business that has trade credit insurance in place. As an insured company, your balance sheet will remain protected at a predetermined reimbursement rate (often between 75-90% of debt value), whether your customer has declared bankruptcy or simply cannot (or will not) pay its accounts due. It also helps to free up capital for use elsewhere in your business and helps reduce bad debt reserves.

Typically, a company would look to insure its whole customer portfolio, which is the most common type of policy. It can, however, also be customized to include only selective or key accounts, in the case of higher-risk customers.

Trade credit insurers offer a wide range of flexible products and policies, which are designed to cater for each company’s different coverage requirements. When seeking out such coverage, you should engage with a broker who has experience and expertise with global risk issues and trade finance solutions. Our experts can assist you with assessing and developing your specific requirements and then help you select the most appropriate coverage.

Coverage can be structured in a variety of ways, including:

Whole turnover: This is the most common policy type, which covers a company’s entire trade receivables portfolio under one policy, insuring a wide range of domestic and export transactions.

  • Key accounts: This policy is designed to insure a company’s largest customers or another defined band of coverage where the greatest risk exists (i.e., selective cover).
  • Single risk: This policy is designed to insure exposures related to one customer.
  • Excess of loss: This policy is designed to cover catastrophic or exceptional losses of the largest customers above the normal level of bad debt, by setting a suitable deductible level.

Each of the policies can cover domestic sales, export sales, or a combination of both – and can be defined regionally or globally. Political risk insurance is often included.

Given all of these options, for many businesses, trade credit insurance remains affordable: coverage costs typically represent less than 1% of sales revenues.

Trade credit insurance is a dynamic product. Credit limit requirements on customers change throughout a policy period, reflecting changing business needs. Therefore, Marsh typically supports its clients in many interactions with insurers to obtain or increase credit limits.

Why Marsh?

With a global network of more than 400 dedicated and award-winning trade credit specialists spanning 52 countries, Marsh’s Specialty Trade Credit Practice experts understand the culture, language, regulations, industry practices, and economic landscape across geographies to help your company manage receivables risk with cost-effective insurance solutions. Additionally, our multinational service team provides claims management and advocacy services in compliance with local insurance laws.

Our people

Placeholder Image

Andrew Toh

Senior Vice President, Trade Credit Practice Leader

  • Singapore

Placeholder Image

Jodi Seah

Trade Credit Sales Leader, Asia Credit Specialties

  • Singapore