It covers the domestic risk of insolvency of the buyer or his protracted default. This policy also covers the export of capital goods or services on credit terms.

The Policy may be ceded to banks and financial institution as form of collateral for loans. Once a policy is running a Tripartite agreement is made between the bank and the insured with CredSure. The contract will stipulate its cover and limit of indemnification.

The most common reason for not getting paid is that a buyer goes bankrupt before payment is due. Through a trade credit insurance policy a supplier can assure payment, either from their buyer or from their insurer. Bankruptcy, or its equivalent depending on the jurisdiction, is a recognised cause of loss in trade credit insurance policies, and triggers the start of the claims and collections process.

A domestic credit insurance policy addresses the payment risks of buyers that are established in the same country as the supplier. Domestic policies usually have lower premium rates and a relatively simple structure.

Credit insurance is priced on the basis of standard actuarial techniques. It is sold mostly on a whole turnover basis (whole turnover cover policy) and premium rates are generally given as a percentage of the company’s turnover (including financially sound and weak customers).