Credit Insurance
National’s Credit Insurance Policy offers an all-round protection to corporate houses against such trade receivables by offering coverage against buyer insolvency and payment default in domestic market, in overseas market or in both. Thus more than just another insurance product, Credit Insurance in true sense is a financial risk management tool that adds value to the receivable management process. Professionally designed for in-depth analysis, account monitoring and triggering alert signals for impending default, this state-of-art offering of National Insurance can thus ensure complete peace of mind and helps corporate houses to concentrate on their resources and enables a company to design its financial roadmap towards achieving its corporate objective through improved financial performance.
- Balance Sheet protection
- Credit / Risk Management
- Effective bad debt provisioning
- Cash flow relief
- Alternative to Letters of Credit (LC) for exports
- Increase Market Share through expansion of sales in new market
- Securing better borrowing terms
- Constant monitoring on buyers and his forward chain
- Considerable saving on cost
The Credit Insurance Policy of National is an annual policy that covers Commercial and Political Risks from the date of shipment falling within the policy period. For the purpose of the policy, Commercial Risk includes insolvency and/or default of the approved buyers. Political Risk, which is covered only in case of Exports and is also an optional cover for approved buyers, means government restrictions on account of war, civil war, revolution etc. However, the policy does not cover commercial disputes, quality disputes, buyer’s failure to obtain exchange authorization, exchange rate fluctuations and exporter’s failure to fulfill the contract.
This policy becomes null and void on existence of any other Credit Insurance Policy
This policy is not assignable to any Financial Institution and/or Banks
An approved buyer will not include the following:
- Any sovereign, state, government, government body or department or Para Governmental Agencies
- Any buyer for whom the Company has refused a Credit Limit
- Any buyer to which the insured or any of it’s directors, members or employees are connected with financially and/or managerially/any subsidiary/associate or controlled entity
- Buyer for single shipment/invoice and also where the no. of buyers are less than ten
- Banks/Financial Institutes/Lender and the buyer of any receivable arising from a financial services or consultancy services
- Factoring, Financial Guarantee and/or Reverse Factoring
a) Commercial Risk:
i) Insolvency of approved buyer:
The buyer shall be deemed to be insolvent for the purpose of this policy when
- The buyer is declared bankrupt by the competent court of jurisdiction
- The buyer has made a valid assignment/composition/other arrangement for the benefit of his creditors
- A Receiver/Administrator/Liquidator has been appointed by the court to manage his estate
- An order by the Competent Authority has been made for compulsory winding up
- An effective resolution has been passed for voluntary winding up provided that this resolution is not merely for the purpose of reconstruction or amalgamation
- An arrangement binding on all creditors has been sanctioned by the appropriate court
- Such and other relevant conditions exist as are in the opinion of the Company substantially equivalent in effect to any of the foregoing conditions
ii) Presumed Insolvency or Protracted Default by the approved buyer:
Protracted default is the non-payment for (specified number of) days after the expiry of the due date for payment, of any undisputed invoice submitted by the insured (supplier) to his buyer.
b) Political Risk (For Exports only):
Political risk is the failure of the approved buyer to pay to the insured following an event outside the control of the buyer or the seller & any insured debt which remains unpaid due in any part by reason of expropriation, confiscation, conspiracy, commandeering, piracy, requisition, embargo, exchange controls, nationalization or destruction of the whole or any part of the assets of the approved buyer by acts of Government or any laws or regulations in force in the country that have an effect on the goods/services subject to the insured debt, or any other action by order of the Government, whether lawful or de facto, or any public authority. Political risk cover is optional and it may be granted to the overseas approved buyers only. Political risk cover is not granted to the domestic buyers.
- Disputed debts
- Insolvency or Financial Default of any agent / employee of the insured
- The insured debt as to which the insured has accepted a composition or arrangement with an approved buyer, without prior approval of the insurer
- If the rights under the policy including recovery rights are assigned by the insured without prior approval of the insurer
- Trade receivable arising out of factoring, reverse factoring, bill discounting or any other arrangement
- Arising out of application of interest and penalties, fines, punitive or exemplary losses imposed upon the approved buyer
- Consequential losses of any nature, including loss of export incentives such as duty drawbacks, special license etc.
- Arising out of sales under special contracts of sale, unless specifically covered by the policy
- Voluntarily accepted by the Insured by agreement, which would not have attached in absence of such agreement
- Arising out of deliberate, willful or intentional non-compliance of any statutory provision
- Arising due to non-acceptance of goods or contract cancellation by the approved buyer
- Arising due to natural disasters
- Material misstatement or non-disclosure of any material fact/information by or on behalf of the Insured
- Interest, taxes, consequential losses etc
- Acts of Dishonesty and fraud on the part of the employees of the insured
- Arising out of deliberate, conscious or intentional disregard of the Insured’s credit management procedures and/or the credit procedures set out in the policy
- Sales made to subsidiaries/associates/any sovereign, state, government, government body or para governmental agencies
- Arising out of sales made in excess of discretionary/sanctioned credit limits to any approved buyer
- Sales made to buyers for whom the insurer has refused any credit limit
- Sales made after becoming aware of adverse circumstances/features likely to give rise to a claim under the policy
- Financial guarantee as comprising any bond, guarantee, indemnity or insurance covering financial obligations in respect of any type of loan, personal loan and leasing facility, granted by bank/credit institutions, financial institutions or financier
- Nuclear and allied perils
