What does Credit Insurance cost?

Multi-Buyer (portfolio) premium rates usually reflect the riskiness of the buyers’ countries and the length of the credit terms extended, as well as past loss experience. Rates are typically set between $0.30 and $.75 per $100 of gross invoice value. This means a $100,000 sale would cost between $300 and $750 to insure. 

Portfolios over $10,000,000 in annual insured sales, or those that are entirely, or largely, domestic (U.S.), or where Western Europe represents a significant part of the portfolio, can obtain coverage at even lower rates.

Call ERM at (860) 435-0430 for a rate estimate. There is, of course, no obligation.

Ex-Im Bank offers special fixed rate pricing for its "Small Business" Multi-Buyer Policy. Users must be a "small" business according to the SBA, and average less than $5 million in annual export sales on credit terms. These rates are determined primarily by the credit period extended. 

For example, the rate for sales to private sector buyers on open account terms up to 60 days is $0.65 per $100 of the gross invoice value, or $650 for a $100,000 shipment, no matter what the country. Small Business policies carry no annual deductible and can feature enhanced lender protection, along with 100% protection against "political" risk losses ("commercial" risks are covered 95%).

Rates for Short-Term Single Buyer (single sale) policies depend on terms, the buyer’s country, and the type of buyer (private vs. government). Due to high minimum premiums, these policies are usually cost-effective only when sales contracts with a single customer approach $500,000. 

Ex-Im Bank's minimum premium for a Single Sale policy is $1,000; commercial underwriters tend to ask for at least $5,000.

Medium-Term Single Buyer rates reflect a variety of factors as well, primarily the country and tenor of the repayment, but there is no minimum premium. As a rough guideline, add 1% to the interest rate to cover the cost of the exposure premium.

Contact ERM at (860) 435-0430 for estimated pricing for both Single Buyer and Medium-Term policies. Again, there is no obligation.

* * *

This is a description of certain features of typical insurance policies. Your policy may be different. The actual terms and conditions are contained in the applications, policy text, and endorsements. This is not a solicitation of coverage, which can only be made by a licensed insurance broker or authorized representative. Please read our disclaimer.


Copyright © 2010 Export Risk Management, Inc.