Trade Credit

When goods or services are sold on credit terms there is always the risk that the purchaser will default. Trade credit insurance provides protection to a policyholder against non-payment of accounts receivable. The policy can provide cover for all contracts entered into for the sale of goods and services provided on credit during the policy period. The event that triggers the policy cover is protracted default by a customer due to insolvency or a political risk. Trade credit insurance removes the credit risk from the policyholders’ balance sheet. Financiers often rely on the existence of trade credit insurance when providing finance to participants in international supply chains.

Our team has experience in providing indemnity advice on policy response to trade credit claims. Complex coverage issues can arise under trade credit policies particularly when they involve international trade. There are often competing contractual and property claims. We have acted in multiple trade credit claims involving supply chain finance. When a claim is covered we work with the insurer to complete the adjustment of the claim and to negotiate a settlement outcome. We then assist with the pursuit of a subrogated recovery action.

When trade credit claims have been denied, we have defended insurers from claims by insureds, and claims by a financiers seeking access to the insurance cover. Invoicing fraud is a significant risk in this line of insurance and we have assisted with the investigation of potentially fraudulent claims.