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What is Trade Credit Insurance
Trade Credit Insurance 101 is an educational series created to simplify trade credit insurance terminology and concepts. It is designed to help UAE exporters understand key payment risks and how trade credit insurance works in real business situations.
When exporters sell goods internationally, getting paid is part of the deal. However, when sales are made on credit terms, payment is not immediate and it is not guaranteed.
As exporters grow, enter new markets, and compete internationally, offering credit terms often becomes necessary. This is where payment risk becomes part of everyday business.
What is Trade Credit Insurance?
Trade Credit Insurance protects exporters against the risk of not getting paid by their buyers.
It covers losses caused by buyer insolvency or prolonged non-payment. In some cases, it can also cover political events that prevent payment.
In simple terms, it protects a business’s receivables when goods are sold on credit.
Why do exporters need it?
For many exporters, a single unpaid invoice can have a serious impact on the business. Non-payment can:
- Disrupt cash flow
- Delay production or future shipments
- Create pressure on working capital
- Slow down growth plans
As exporters expand into new markets or work with new buyers, the risk of non-payment increases. Trade Credit Insurance helps businesses manage this risk so growth does not come at the expense of financial stability.
What Does Trade Credit Insurance Cover?
Trade credit insurance typically includes:
- Commercial risks: buyer insolvency or default
- Protracted default: failure to pay within agreed timelines
- Political risks: restrictions, instability, or events preventing payment
Types of Trade Credit Insurance
Businesses can choose different types of coverage depending on their needs:
- Whole Turnover Insurance:
Covers all buyers and the full portfolio of receivables - Single Buyer / Single Risk Insurance:
Covers specific buyers or large individual transactions
👉 Read more:
A simple example
A UAE exporter ships AED 1.8 million worth of goods to an overseas buyer on 90-day payment terms. Before payment is received, the buyer becomes insolvent.
Without protection, the exporter absorbs the full loss. With Trade Credit Insurance from Etihad Credit Insurance (ECI), the exporter can recover a significant portion of the insured amount, allowing the business to continue operating.
Who Should Use Trade Credit Insurance?
Trade credit insurance is relevant for:
- Exporters selling on credit terms
- SMEs expanding into new markets
- Manufacturers with large buyer exposure
- Businesses seeking financing support from banks
How Etihad Credit Insurance (ECI) helps
Etihad Credit Insurance (ECI) supports UAE exporters by:
- Protecting receivables against non-payment
- Supporting cash flow stability
- Providing access to market intelligence
- Enabling safer expansion into international markets
Businesses seeking portfolio-level protection can explore Whole Turnover Insurance, while exporters managing larger individual transactions may benefit from Single Risk Insurance.
Companies looking to reduce exposure to buyer default risks can also consider Non-Payment Insurance.
👉 Explore ECI’s trade credit insurance solutions.