How much does credit insurance cost?

The price of a credit insurance policy can be shown as a simple equation:

Percentage of turnover x Level of risk = Cost of policy

Costs vary from business to business and even between individual customers as most credit insurance policy providers look at a variety of factors before determining level of risk.

The price of credit insurance

Taking out insurance to cover your cash flow is similar to many different insurance policies when it comes to working out the price. For example, building insurance is calculated according to the size and location of the property and how vulnerable it might be to risks such as flooding or earthquakes. This calculation is unique to the building. In the same way, the cost of credit insurance is calculated against perceived levels of risk and specific requirements, which means that every policy is unique.

Your credit insurance company will assess the risk based on the trading history you have with your customer as well as their history trading with others, the stability of the sector, the political volatility of your customer’s location and other factors. They will also consider your individual needs, for example do you need cover for a large or long project that requires non-cancellable credit limits or whole turnover cover?

Calculating the cost of Atradius Credit Insurance

At Atradius China we offer cover under a system called Modula. This system allows us to tailor cover – including the cost of the cover – to the individual business. This means that regardless of whether you run a small business focusing on domestic trade, or are the credit controller of a large multinational, our policy will meet your needs and your pocket. You won’t need to pay for something you don’t need as the policy is designed specifically for your own needs. Learn more about Atradius Credit Insurance.

As a guide, the cost of credit insurance typically ranges between less than 0.1% of turnover to more than 1%. Each policy – for each of your customers – will be priced uniquely. It is the trade you have with your customer that is covered, so you’ll only need one policy per customer per year. Premiums are usually paid quarterly.

Related content

What is credit risk?

Credit risk is a term applied to the dangers associated with lending anyone goods, services or money.

Risk map

The Risk Map gives an overview of the level of risk associated with countries worldwide. Risk ratings are based on a variety of political and economic factors gathered by our Economic Research Team.

Why credit management is important?

Learn how good credit management helps prevent late payment and detects potential non-payment before it becomes a problem. Atradius China +8621 61608022.

Disclaimer

Each publication available on or from our websites, such as, but not limited to webpages, reports, articles, publications, tips and helpful content, trading briefs, infographics, videos (each a “Publication”) is provided for information purposes only and is not intended as a recommendation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in any Publication has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in any Publication is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in any Publication, or for any loss of opportunity, loss of profit, loss of production, loss of business or indirect losses, special or similar damages of any kind, even if advised of the possibility of such losses or damages.