Accounts receivables (trade credit) are one of a corporation’s largest and most vulnerable assets. It is the second most liquid asset after cash and represents a significant investment of working capital.

Trade credit insurance protects against non-payment of receivables by your customers due to insolvency, creditors’ protection arrangements, or protracted default (late payment). In the case of export sales, the insurance can protect against non-payment due to certain political events beyond your customer’s control.

Trade credit insurance is not for corporations that have poor credit management or are seeking to transfer high levels of bad debt to an insurer.

Credit insurance complements credit management and can add significant resources and intelligence to prevent losses and aid decision-making through access to the insurer’s buyers database.

General uses of trade credit insurance include:

To benefit corporate financial planning

• Protect the balance sheet/profit and loss
• Limit an area of budget variance and risk concentration
• Profit from additional sales supported via insurance through capability of sales people to extend pre-approved credit limits
• Aid credit management decision-making via access to insurers credit database

To improve working capital finance

• Expand your eligible receivables base for financing
• Save from reduced interest costs
• Reduce costs associated with letters of credit
• Enhance accounts receivables securitization
• Strengthen relationship with your financial institution by lowering your overall risk profile

Accounting and tax benefits

• Lower bad debt reserves for one-time income gain
• Tax efficiencies of insurance vs. bad debt reserve
• Improve your company’s financial profile

The Role of Marsh as your Risk Advisor

Marsh offers services in risk analysis, program design and review, marketing to insurers, and placement with ongoing support and service. Our approach is to identify and realize financial, accounting, and tax benefits that can have a positive impact with our clients and their stakeholders.

There are significant savings to be made in most situations where competing proposals are secured. Having our experts structure proposals for you will result in a comprehensive program with a broad amount of coverage for a competitive price. We will also help maintain your program, negotiate for coverage additions, and advise on claims.

Marsh specialists can help you not only quantify and summarize your accounts receivable (eg. by country or by buyer group), but also advise on credit risk mitigation and alternative non-insurance solutions.

The Trade Credit Insurance Market

In Canada, there are several insurers from which to choose, with more new entrants anticipated. There is strong competition for coverage, price, and also the scope of services. As a result, there has been an increase in demand for well-priced and highly customized programs. Credit ratings of the insurers range from A- to AAA.

Marsh Resources

Marsh has a large team of Trade Credit insurance specialists in Canada and is the leading broker by premium volume. We are part of a network of 46 dedicated Trade Credit insurance offices in 24 countries worldwide.

Our volume of insured sales worldwide is in the region of US$250 billion, which has allowed us to build significant market relationships. Marsh has credit specialists in all the major finance centers around the globe working as a network for client servicing.