An order from which the insured cannot be released if the buyer’s financial soundness is deteriorating. Under predefined conditions, credit insurance may be offered for such contracts even after withdrawal of the credit limit.

A policy feature that provides (a reduced percentage of) cover when no credit limit has been established on the Buyer and no adverse information is known. See also under First sale clause / First order cover.

The party via whom an application for insurance is presented from prospective insured to the insurer.

The business entity to which an insured sells their goods or services.

A policy, which covers applications for indemnification made during the policy term. See also: Losses occurring policies and Risk attaching policies.

Claims payments and expenses divided by gross earned premium and premium related revenue.

The amount below which losses do not qualify for indemnification and are to be kept by the insured for their own account.

The period, usually starting from the due date of payment or intervention order, after the expiry of which a claim may be submitted and the loss is assessed.

Party that purchases the insurance policy and assumes responsibilities and obligations under that policy.

The percentage of each insured loss that is not indemnified by the insurer and that the insured has to bear for its own account.

Assets, rights or guarantees pledged as security by the buyer or by a third party on behalf of the buyer for the extension of credit by the insured to the buyer.

The costs incurred in preventing or minimizing the loss or in collection of the amount owing by the buyer.

1. The sum of claims payments, claims expenses and underwriting expenses, including the cost of credit information, divided by the sum of earned premium and premium related revenue;
2. The sum of claims ratio and underwriting expense ratio.

The date on which the insurance begins to take effect (at date of order or transaction, delivery or shipment, completion or performance of services) for each individual trade transaction covered under the policy.

The risk of a deterioration in the financial situation or creditworthiness of a private buyer, resulting in payment default by or the insolvency of the buyer, not caused by circumstances or occurrences defined as political risk.

enumeration of a party (e.g. a broker for services rendered).

1. Insurance covering the entire sales turnover of the insured (opp. Single risk cover);
2. Insurance for both commercial and political risks.

Possession of goods by a consignee with the obligation to pay the supplier after the sale to a third party or when using the goods.

A conditional obligation of one party to another, triggered by specified events.

Impossibility to perform a trade contract.

An arbitrary withdrawal of a party from its duties and responsibilities imposed by a contract.

The commercial risk of insolvency of a buyer before delivery or shipment of the goods or performance of a service, and/or the political risk of any interruption of the manufacturing of the goods or performance of a service.

1. The risk of revocation by the buyer’s government of the buyer’s pre-existing legal right to make payment in an invoiced currency other than the currency of the buyer country, at any rate of exchange;
2. political risk resulting from an event outside the insured’s country preventing or delaying the transfer of funds paid by the debtor to a local bank

The sum of underwriting expenses, including the cost of credit information, divided by the sum of earned premium, including premium-related revenue.

Expenses incurred for uncompleted rendered services or product construction.

Terms of coverage imposed by the insurer for their acceptance of cover on (buyers in) a particular country.

The maximum exposure specifically approved or otherwise authorized by the insurer in respect of a particular country.

An indication of creditworthiness of a country.

The percentage of each insured loss that is indemnified by the insurer.

Contribution to the costs of credit information gathered for the assessment of the buyer’s risk.

The maximum exposure specifically approved or otherwise authorized by the insurer in respect of a buyer.

1. The period after delivery or shipment of goods or after rendering of services at the expiry of which invoices are due to be paid;
2. The period of time provided by the insured to the buyer for repayment of delivered goods or services.

Assessment by the credit insurer of the financial condition of buyers, before setting a credit limit.

“Customer” may refer to both the Buyer and the Insured. See under these terms.

1. Date on which the insured loss will be assessed by the insurer;
2. Date on which the insured loss is deemed to have occurred.

An amount below which buyers are not to be included in the insurance policy.

The specification of outstanding balances (typically at end of the month) on the buyers covered under the policy for the purpose of premium calculation.

The specification of the invoiced turnover on the buyers covered under the policy for the purpose of premium calculation.

The amount of loss that must be absorbed by the insured before indemnification under the policy.

The failure of the buyer to meet their contractual (payment) obligations. A default is an event that can lead to a loss for the credit insurer, such as bankruptcy, Chapter 11 (or any other failure to pay of the buyer) which is covered under the insured’s policy.

Making the goods available to the buyer or any person acting on their behalf at the place and on the terms specified in the sales contract.

The period between date of order and delivery or shipment of goods.

(Installments of) premium paid in advance, to be adjusted on receipt of the declaration of turnover or outstanding balances.

Relief of a party from a financial commitment.

The amount up to which, according to given guidelines, the insured may set a credit limit without specific review by the insurer.

Transactions with buyers domiciled in the same country as the insured.

Date by which the buyer must pay their debt according to the sales contract or invoice.

Obligation of the insured to notify the insurer of changes of insurable turnover as indicated on the applications form for the policy, adverse information or overdue accounts.

The amount to be deducted from each claim payment to be kept for the account of the insured.

The date on which the policy comes into force.

An addendum or enhancement to the policy conditions.

Insurance, cover or indemnification in excess of an amount of first loss to be borne by the insured.

Fluctuation in the buyer’s currency against another currency, which may affect the buyer’s financial ability to pay its obligations.

Insurance against the credit risk related to the sale of goods to buyers in another country.

The total amount underwritten by the insurer as cover on a buyer, a country or under a policy or all policies.

Granting of a credit term longer than originally agreed upon in the sales contract.

The maximum due date extension allowed under a policy.

(Re)insurance in respect of a particular risk instead of a portfolio of risks.

A Financial Guarantee is understood 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 a bank/ credit institution, financial institution or financier or issued or executed in favor of any person or legal entity in respect of the payment or repayment of borrowed money or any contract transaction or arrangement – the primary purpose of which is to raise finance or secure sums due in respect of borrowed money. By way of explanation, the purpose of this definition is the avoidance of insurance cover for any financial obligation which does not arise from or relates to a trade transaction defined as the supply of goods and/or rendering of services.

A policy feature that provides cover for risks commencing before a credit limit has been established, for buyers with whom the insured has not traded before.

An individual or company that gives a promise or assurance that an obligation owing from the buyer to the insured will be paid.

Any events or circumstances that have lead or may lead to a high possibility of a claim.

Compensation for a loss.

A judicial or administrative procedure whereby the assets and affairs of the buyer are made subject to control or supervision by the court or a person or body appointed by the court or by law, for the purpose of reorganization or liquidation of the buyer or of the rescheduling, settlement or suspension of payment of its debts.

The party offering insurance policies for premiums, an underwriter.

1. Unalterable obligation of a bank authorizing a person or company to draw money up to a specified amount, usually a third party bank, subject to documentary compliance;
2. As per definition in UPC.

Insurance offered by more than one insurer for their combined account.

A party, which together with the insured, purchases the insurance policy and assumes specified responsibilities and obligations.

An insurer offering insurance policies in cooperation with one or more other insurers for their combined account.

(Key buyer, key customer, Major Debtor Cover) (Cover for) the insured’s largest buyers only (as opposed to whole turnover cover or single risk cover).

A policy under which cover is conditional on the date of the cause of loss occurring within the policy period. See also Risk Attaching policy, Claims Made policy.

The leading insured acting on behalf of a group of joint-insured.

The leading insurer acting on behalf of a group of joint insurers.

The period between the date of order and the delivery or shipment of the goods.

The longest credit period approved for a buyer under the policy.

The maximum insured period between contract date and shipment of goods or provision of services.

Average period between date of order and date of delivery or shipment of goods or completion of services.

Average period between delivery or shipment of goods and due date of invoice.

Transactions under which the insured provides the buyer with a credit period between 1 and 3 to 5 years in length, usually characterized by a down payment followed by equal installment of payments.

The agreed minimum amount of premium to be paid for a specified period regardless of the volume of declared turnover or outstanding balances.

The minimum amount of each loss that the insured has to bear for their own account.

A cessation of payments, usually by a government, to all or a class of creditors.

The manifestation of a natural force that is beyond the control of the insured, buyer, guarantor or government. See also: Political risk.

An amount or percentage provided to the insured as a reduction of premium owed, depending on the claims ratio of the policy.

The refusal or failure of the buyer to take possession of products shipped by the insured.

An insurer’s written offer of policy terms and conditions, subject to change by the insurer.

The risk that a buyer will default on their obligation to pay an invoice.

The amount below which losses do not qualify for indemnification and are to be kept by the insured for their own account.

Credit limits which remain valid for the duration of the policy period and cannot be canceled by the insurer. Cover, however, may be automatically deactivated on the occurrence of certain defined events, e.g. rating downgrade, overdue payments etc.

An application by the insured for indemnification of a loss under the policy.

An indication of conditions for cover based on information given on an application form.

A buyer’s obligation that has not been paid by its due date.

The failure by a buyer to make payment for delivered goods or services by the due date specified in the invoice or sales contract. A default is an event that could lead to a loss for the credit insurer such as bankruptcy, Chapter 11 (or any other failure to pay of the buyer) which is covered under the insured’s policy.

1. The period after delivery or shipment of goods or after rendering of services at the expiry of which invoices are due to be paid;
2. the period of time provided by the insured to the buyer for payment for delivered goods or services.

The percentage of each insured loss that is indemnified by the insurer.

The currency in which all financial transactions or amounts under the policy are denominated (credit limits, indemnifications, costs, premium, deductibles etc.).

The maximum amount that the insurer is liable to pay in respect of all losses during a policy period.

The party that purchases the insurance policy and assumes responsibilities and obligations under the policy.

1. The risk that a government buyer or country prevents the fulfillment of a transaction or fails to meet payment obligations in time;
2. a risk that is beyond the scope of an individual buyer or falls outside the individual buyer’s responsibility;
3. the risk that a country prevents the performance of a transaction;
4. the risk that a country remains in default to transfer to the country of the insured the moneys paid by buyers domiciled in that country.

The risk of non-payment arising after the delivery of shipment of the goods or completion of the performance of services.

The commercial risk of insolvency of a buyer before delivery or shipment of the goods or performance of a service, and/or the political risk of any interruption of the manufacturing of the goods or performance of a service.

The sum of money paid to buy an insurance product.

The business entity to which an insured sells its goods or services and that is: 1. not a public buyer; 2. not majority-owned by a government.

A person who buys goods or services for a purpose other than the purpose of their professional activity or business.

1. An arrangement whereby the insured can receive back a portion of premiums paid according to certain conditions (usually dependent on the claim ratio of the policy).
2. The distribution of a percentage of the profits of the policy back to the insured according to certain conditions (usually dependent on the claim ratio of the policy).

The failure by a buyer to pay the contractual debt within a pre-defined period calculated from the due date or extended due date of the debt.

1. authorized to enter into commitments in the name or on behalf of the government of its country, including the government itself, government agencies or any public sector institutions;
2. majority-owned by a government;
3. an entity whose commitments are guaranteed by the government.

Reinsurance in respect of a portfolio of risks insured by a primary insurer and under which the risk is shared on a percentage basis between the insurer and re-insurer, i.e. not on an excess-of-loss basis

Proceeds received from the buyer or a third party, whether before or after a claim has been indemnified.

The prolongation of a policy or a credit limit after expiry of their validity or after a specified period of time.

Amending the credit terms of a debt by setting one or more new due dates.

The part of a loss which is not indemnified by the insurer and for which the insured must bear the loss without recourse to any other party.

A condition in a sales contract which reserves the seller’s right of product ownership until the seller has received full payment.

A policy under which cover attaches based on shipment dates and where the shipment date (but not necessarily the loss) must occur within the policy period. See also Claims Made policy, Losses occurring policy.

Continuation of cover of risks, where the cover commenced before withdrawal of a credit limit or the expiry of a policy until payment or until the occurrence of a covered cause of loss.

Inclusion of cover of amounts outstanding on buyers at the effective date of the policy or the date a credit limit applied for or established.

Proceeds received from the buyer or a third party, whether before or after a claim has been indemnified.

The placement en route to the buyer of the goods

Transactions under which the insured provides the buyer with a credit period up to two years.

Cover for all sales to one debtor or for a single contract with one debtor (as opposed to whole turnover and key buyer).

Upon payment or indemnification of a claim to the insured caused by a failure of the buyer, the insurer steps into the insured’s position and assumes all the rights and remedies of the insured against the buyer. By executing these rights and remedies the insurer can;

1. possibly recover the indemnified amount from the buyer;
2. avoid overcompensation to the insured. Subrogation occurs without any agreement between the insurer and the insured.

Exposure to economic and political risks in a country other than the country of the insured or of the buyer; usually a country through which shipments may pass or where the goods are to be delivered, or the services to be performed.

Additional coverage over a credit limit established by ordered by the buyer. the same or another insurer.

The period of time between a foreign buyer applying for foreign exchange to repay their obligation to an insured and the insured receiving the funds.

The percentage of each insured loss that is not indemnified by the insurer and that the insured has to bear for their own account.

The period, usually starting from the due date of payment or intervention order, after the expiry of which a claim may be submitted and the loss is assessed.

A declared military conflict between nations.

A credit insurance policy that covers the insured’s total credit sales (as opposed to Key buyer cover and Single risk cover).