You do not have permission to edit this page, for the following reasons:

This IP address has been blocked from editing Wikipedia.
This does not affect your ability to read Wikipedia pages.
Most people who see this message have done nothing wrong. Some kinds of blocks restrict editing from specific service providers or telecom companies in response to recent abuse or vandalism, and can sometimes affect other users who are unrelated to that abuse. Review the information below for assistance if you do not believe that you have done anything wrong.

The IP address or range 44.203.0.0/16 has been blocked (disabled) by ‪ST47‬ for the following reason(s):

The IP address that you are currently using has been blocked because it is believed to be a web host provider. To prevent abuse, web hosts may be blocked from editing Wikipedia.
You will not be able to edit Wikipedia using a web host provider because it hides your IP address, much like a proxy or VPN.
We recommend that you attempt to use another connection to edit. For example, if you use a proxy or VPN to connect to the internet, turn it off when editing Wikipedia. If you edit using a mobile connection, try using a Wi-Fi connection, and vice versa. If you are using a corporate internet connection, switch to a different Wi-Fi network. If you have a Wikipedia account, please log in.
If you do not have any other way to edit Wikipedia, you will need to request an IP block exemption.

How to appeal if you are confident that your connection does not use a web host's IP address:
If you are confident that you are not using a web host, you may appeal this block by adding the following text on your talk page: ((unblock|reason=Caught by a web host block but this host or IP is not a web host. My IP address is _______. Place any further information here. ~~~~)). You must fill in the blank with your IP address for this block to be investigated. Your IP address can be determined here. Alternatively, if you wish to keep your IP address private you can use the unblock ticket request system. There are several reasons you might be editing using the IP address of a web host (such as if you are using VPN software or a business network); please use this method of appeal only if you think your IP address is in fact not a web host.

Administrators: The IP block exemption user right should only be applied to allow users to edit using web host in exceptional circumstances, and they should usually be directed to the functionaries team via email. If you intend to give the IPBE user right, a CheckUser needs to take a look at the account. This can be requested most easily at SPI Quick Checkuser Requests. Unblocking an IP or IP range with this template is highly discouraged without at least contacting the blocking administrator.

This block will expire on 23:54, 31 July 2024.

Even when blocked, you will usually still be able to edit your user talk page, as well as email administrators and other editors.

For information on how to proceed, please read the FAQ for blocked users and the guideline on block appeals. The guide to appealing blocks may also be helpful.

Other useful links: Blocking policy · Help:I have been blocked
Your IP address is in a range that has been blocked on all Wikimedia Foundation wikis. The block was made by ‪AntiCompositeNumber‬. The reason given is Open proxy/Webhost: Visit the FAQ if you are affected .
- Start of block: 13:55, 18 August 2022
- Expiry of block: 13:55, 18 July 2025
Your current IP address is 44.203.232.145. The blocked range is 44.203.0.0/16. Please include all above details in any queries you make. If you believe you were blocked by mistake, you can find additional information and instructions in the No open proxies global policy. Otherwise, to discuss the block please post a request for review on Meta-Wiki. You could also send an email to the stewards VRT queue at stewards@wikimedia.org including all above details.

You can view and copy the source of this page:

((Short description|Business insurance))
((More citations needed|date=March 2009))
'''Trade credit insurance, business credit insurance''', '''export credit insurance''', or '''credit insurance''' is a type of [[insurance policy]] and a [[risk management]] product offered by private insurance companies and governmental [[export credit agency|export credit agencies]] to business entities wishing to protect their [[accounts receivable]] from loss due to [[credit risk]]s such as protracted [[Default (finance)|default]], [[insolvency]] or [[bankruptcy]]. This insurance product is a type of [[property insurance|property]] and [[casualty insurance]], and should not be confused with such products as [[credit life insurance|credit life]] or [[credit disability insurance]], which individuals obtain to protect against the risk of loss of income needed to pay debts. Trade credit insurance can include a component of [[political risk insurance]] which is offered by the same insurers to insure the risk of non-payment by foreign buyers due to currency issues, political unrest, expropriation etc.

This points to the major role trade credit insurance plays in facilitating [[international trade]]. [[Trade credit]] is offered by vendors to their customers as an alternative to prepayment or [[cash on delivery]] terms, providing time for the customer to generate income from sales to pay for the product or service. This requires the vendor to assume non-payment risk. In a local or domestic situation as well as in an export transaction, the risk increases when laws, customs communications and customer's reputation are not fully understood. In addition to increased risk of non-payment, international trade presents the problem of the time between product shipment and its availability for sale. The account receivable is like a loan and represents capital invested, and often borrowed, by the vendor. But this is not a secure asset until it is paid. If the customer's debt is credit insured the large, risky asset becomes more secure, like an insured building. This asset may then be viewed as [[Collateral (finance)|collateral]] by lending institutions and a loan based upon it used to defray the expenses of the transaction and to produce more product. Trade credit insurance is, therefore, a trade finance tool.

Trade credit insurance is purchased by business entities to insure their accounts receivable from loss due to the insolvency of the debtors. The product is not available to individuals. The cost (premium) for this is usually charged monthly, and is calculated as a percentage of sales for that month or as a percentage of all outstanding receivables.

Trade credit insurance usually covers a portfolio of buyers and pays an agreed percentage of an invoice or receivable that remains unpaid as a result of protracted default, insolvency or bankruptcy. Policy holders must apply a [[credit limit]] on each of their buyers for the sales to that buyer to be insured. The premium rate reflects the average credit risk of the insured portfolio of buyers. In addition, credit insurance can also cover single transactions or trade with only one buyer.

== History ==
Historical antecedents of trade credit insurance (and even of [[credit derivative]]s, more indirectly) date back at least to the 1860s, when [[Johns Hopkins]] endorsed the [[promissory note|notes]] of persons and firms whom he judged to be worthy credit risks, for a price (of up to 5%), making it easier for a note bearer to discount a note, that is, to sell it to another firm or to a bank.<ref name="Farquhar-1922-mentioning-Johns-Hopkins-paper">((Citation |year=1922 |last=Farquhar |first=A.B. |others=with Samuel Crowther |title=The First Million the Hardest: An Autobiography |publisher=Double, Page and Co |url=https://archive.org/details/firstmillionhard00farq/page/198/mode/2up ))</ref>((rp|198–200)) This helped to increase the [[wikt:salability#Noun|salability]] of [[commercial paper]],<ref name="Farquhar-1922-mentioning-Johns-Hopkins-paper"/>((rp|198–200)) which stimulated trade, especially in a world before [[credit card]]s. Hopkins made his credit risk assessments entirely in his head based on intuition guided by firsthand knowledge of the note's author and how he ran his business.<ref name="Farquhar-1922-mentioning-Johns-Hopkins-paper"/>((rp|198–200)) In this respect his endorsing of paper was quite different from today's reliance on [[credit history|credit reporting]]; Hopkins said, "I do not want any report of any kind. I rely on my own judgment and that judgment does not fail me." It had much in common with Hopkins's main activity, [[investment|investing]], being essentially another form of placing bets on businesses and businessmen who he thought were likely to succeed. The practice of endorsing notes for a fee had been known in London before Hopkins's activity in the U.S. but had been nearly unknown in the U.S.<ref name="Farquhar-1922-mentioning-Johns-Hopkins-paper"/>((rp|198–200))

Formalized trade credit insurance was born at the end of the nineteenth century, but it was mostly developed in Western Europe between the [[First World War|First]] and [[Second World War]]s. Several companies were founded in many countries; some of them also managed the political risks of export on behalf of their state.

Following the privatisation of the short-term side of the UK's [[Export Credits Guarantee Department]] in 1991, a concentration of the trade credit insurance market took place and three groups now account for over 85% of the global credit insurance market. These main players focused on Western Europe, but rapidly expanded towards Eastern Europe, Asia and the Americas:
* [[Euler Hermes]], merger of the two credit insurance companies of the [[Allianz Group]]. Euler Hermes is the world's number one credit insurance provider.<ref>[http://www.euroinvestor.co.uk/news/story.aspx?id=11050439 Euro Investor]</ref>
* [[Coface]], a wholly owned subsidiary of [[Natixis]], the financing, asset management and financial services arm of the [[BPCE]] Group. Coface has the largest direct presence in the world.
* [[Atradius]], a merger between NCM and Gerling Kreditversicherung. Later renamed Atradius after it was demerged from the [[Gerling-Konzern|Gerling insurance group]].

Many variations of trade credit insurance have evolved ranging from coverage that can be canceled or reduced at an insurers discretion, to coverage that cannot be canceled or reduced by the insurer during the policy period. Other programs may allow the policy holder to act as the underwriter.

While trade credit insurance is often mostly known for protecting foreign or export accounts receivable, there has always been a large segment of the market that uses trade credit insurance for domestic accounts receivable protection as well. Domestic trade credit insurance provides companies with the protection they need as their customer base consolidates creating larger receivables to fewer customers. This further creates a larger exposure and greater risk if a customer does not pay their accounts. The addition of new insurers in this area have increased the availability of domestic cover for companies.

Many businesses found that their insurers withdrew trade credit insurance during the [[late-2000s financial crisis]], following significant growth in the number of claims, and with insurers foreseeing large losses if they continued to [[underwrite]] sales to failing businesses. The [[Association of British Insurers]] (ABI) reported that in the first quarter of 2009, the number of trade credit insurance claims rose to 9,213, up from 6,225 in the same period in 2008, an increase of 48%. The value of UK claims incurred in 2008 was £360m, compared to £257m in 2007.<ref name=abi>Association of British Insurers (ABI), [https://web.archive.org/web/20090707112929/http://www.abi.org.uk/Information/Policy_Issues/Policy_Issues.aspx Policy Issues], updated 29 June 2009, archived 7 July 2009, accessed 2 January 2023</ref> The withdrawal of cover led to accusations that the insurers were deepening and prolonging the recession, as businesses could not afford the risk of making sales without the insurance, and therefore contracted in size or had to close. Insurers countered these criticisms by claiming that they were not the cause of the crisis, but were responding to economic reality and ringing the alarm bells.<ref name=failure>Jetuah, D., [http://www.accountancyage.com/accountancyage/news/2254318/5bn-government-trade-credit £5bn government trade credit scheme is branded a failure], ''[[Accountancy Age]]'', published 3 December 2009, accessed 8 January 2024</ref> The ABI issued a ''Statement of Principles on Trade Credit Insurance'' in April 2009, which set out how trade credit insurers operated and informed clients about the service they could expect. The Statement of Principles included:
*an overview of how risk assessment decisions are made
*the nature of a "fair assessment of risk", the type of information insurers needed to complete a risk assessment, and the requirement for transparency about customers' financial positions
*a commitment to offer reasons for a decision to stop or substantially reduce credit insurance cover, and to swiftly resolve appeals against decisions, and
*a commitment to work with banks and companies to maximise the potential for UK companies to continue to trade.<ref name=abi /><ref>ABI, [https://web.archive.org/web/20091003035300/http://www.abi.org.uk/Information/Business/665.pdf Advice to Businesses Regarding Information Requests from Trade Credit Insurers], April 2019, archived 3 October 2009, accessed 2 January 2023</ref>

In 2009, the UK government set up a short-term £5&nbsp;billion Trade Credit Top-up emergency fund. However, this was considered a failure, as the take-up was only £18m. from an available fund of £5 billion.<ref name=failure/>

In 2020 another wave of coverage denials in trade credit insurance, prompted by pandemic-related credit risk uncertainty, threatened trade.<ref name="AP-News-2020-09-06">((Citation |last=D'Innocenzio |first=Anne |date=2020-09-06 |title=Suppliers reluctant to ship goods without credit insurance |work=Associated Press News |url=https://apnews.com/5298671099cfadcb9896c660d863dc23 |access-date=2020-09-06 |archive-url=https://web.archive.org/web/20200906200618/https://apnews.com/5298671099cfadcb9896c660d863dc23 |archive-date=2020-09-06 |postscript=.))</ref>

==See also==
* [[Outline of finance#Insurance|List of insurance topics]]
* [[Export credit agency]]
* [[Political risk insurance]]

==References==
((Reflist))

==External links==
* [https://www.trade.gov/export-credit-insurance Export Credit Insurance]

((Insurance))
((Authority control))

[[Category:Types of insurance]]
[[Category:International finance]]
[[Category:International trade]]

Pages transcluded onto the current version of this page (help):

Trade credit insurance (edit)
Template:Ambox (view source) (template editor protected)
Template:Authority control (view source) (template editor protected)
Template:Citation (view source) (protected)
Template:Find sources mainspace (view source) (template editor protected)
Template:Hlist/styles.css (view source) (protected)
Template:Insurance (edit)
Template:Main other (view source) (protected)
Template:More citations needed (view source) (template editor protected)
Template:Navbox (view source) (template editor protected)
Template:Pagetype (view source) (protected)
Template:R/superscript (view source) (template editor protected)
Template:R/where (view source) (template editor protected)
Template:Reflist (view source) (protected)
Template:Reflist/styles.css (view source) (protected)
Template:Rp (view source) (template editor protected)
Template:SDcat (view source) (protected)
Template:Short description (view source) (protected)
Template:Short description/lowercasecheck (view source) (protected)
Module:Arguments (view source) (protected)
Module:Authority control (view source) (template editor protected)
Module:Authority control/config (view source) (template editor protected)
Module:Category handler (view source) (protected)
Module:Category handler/blacklist (view source) (protected)
Module:Category handler/config (view source) (protected)
Module:Category handler/data (view source) (protected)
Module:Category handler/shared (view source) (protected)
Module:Check for unknown parameters (view source) (protected)
Module:Citation/CS1 (view source) (protected)
Module:Citation/CS1/COinS (view source) (protected)
Module:Citation/CS1/Configuration (view source) (protected)
Module:Citation/CS1/Date validation (view source) (protected)
Module:Citation/CS1/Identifiers (view source) (protected)
Module:Citation/CS1/Utilities (view source) (protected)
Module:Citation/CS1/Whitelist (view source) (protected)
Module:Citation/CS1/styles.css (view source) (protected)
Module:DecodeEncode (view source) (template editor protected)
Module:Disambiguation/templates (view source) (protected)
Module:EditAtWikidata (view source) (protected)
Module:Find sources (view source) (template editor protected)
Module:Find sources/config (view source) (template editor protected)
Module:Find sources/links (view source) (template editor protected)
Module:Find sources/templates/Find sources mainspace (view source) (template editor protected)
Module:GetParameters (view source) (template editor protected)
Module:Message box (view source) (protected)
Module:Message box/ambox.css (view source) (protected)
Module:Message box/configuration (view source) (protected)
Module:Namespace detect/config (view source) (protected)
Module:Namespace detect/data (view source) (protected)
Module:Navbar (view source) (protected)
Module:Navbar/configuration (view source) (protected)
Module:Navbar/styles.css (view source) (protected)
Module:Navbox (view source) (template editor protected)
Module:Navbox/configuration (view source) (template editor protected)
Module:Navbox/styles.css (view source) (template editor protected)
Module:Pagetype (view source) (protected)
Module:Pagetype/config (view source) (protected)
Module:Pagetype/disambiguation (view source) (protected)
Module:Pagetype/setindex (view source) (protected)
Module:Pagetype/softredirect (view source) (protected)
Module:Plain text (view source) (template editor protected)
Module:SDcat (view source) (protected)
Module:String (view source) (protected)
Module:String2 (view source) (template editor protected)
Module:Unsubst (view source) (protected)
Module:Wikitext Parsing (view source) (protected)
Module:Yesno (view source) (protected)

Return to Trade credit insurance.

Retrieved from "https://en.wikipedia.org/wiki/Trade_credit_insurance"