What is Trade Credit Insurance - and Why Did COVID-19 Make Businesses Realize They Might Need It?
On March 11, 2020, the World Health Organization officially declared COVID-19 a global pandemic. According to a recent publication on the economic impact of COVID-19 by the Proceedings of the National Academy of Sciences, the median business with more than $10,000 in monthly expenses only had about two weeks of cash on hand at the time of the survey.
As leading commercial insurance brokers, our Agency Partners have examined the circumstances surrounding the pandemic, which enables them to custom-tailor policies to help protect your business from future disasters. Read on to learn more about the volatilities exposed by the pandemic and how trade credit insurance may help to serve as a solution in the future.
The COVID-19 Burdens Shouldered By Small Businesses
Due to the pandemic, many U.S. businesses closed temporarily or began operating at a limited capacity. To recover from suddenly crippled revenue streams, some businesses sought funding through the Coronavirus Aid, Relief, and Economic Security (CARES) Act—but many businesses saw it as difficult to establish eligibility and the program quickly ran out of funds. With no access to government aid, some business owners hoped to file claims for losses under their commercial insurance policies that provided coverage for business interruption.
However, for business interruption coverage to apply to revenue losses, in general, physical damage must be the underlying cause of such losses to the insured business. As a result, although they may have had coverage for business interruption, many business owners realized they did not have coverage for revenue losses resulting from COVID-19—but unfortunately, they realized too late.
How Trade Credit Insurance Can Help Protect Businesses
To help protect businesses from future threats, they should consider adding a trade credit insurance policy to help cover losses from non-payment of a commercial trade debt.
If customers are unable to pay, a trade credit policy can pay a percentage of the debt owed, typically 90% of the amount outstanding. This specifically helps protect against customer insolvency, protracted default, political events, acts of war or disasters like the coronavirus pandemic, among other things.
How to Apply for Trade Credit Insurance
Due to the hard lessons learned from COVID-19, trade credit insurers are now experiencing a surge in new applicants. Acrisure’s Agency Partners deliver in this area by working with TRG (Trade Risk Group), which specializes in trade credit insurance and knows how to help custom-tailor a policy to fit the needs of individual businesses.
We can thoroughly evaluate a business, including its goals for growth. And, we can also examine the financial health of a business’s customers and potential customers, assessing how likely its customers are to pay invoices on time. This helps businesses better understand the coverage amounts recommended—and can also act as a roadmap for avoiding potentially risky customers.
Find the right trade credit insurance partner to help protect your business from future disasters. Contact an Acrisure Agency Partner today.
Important Information:
For additional information, please visit our website at Acrisure.com. Products or services identified herein may not be available in all jurisdictions. The information and descriptions contained herein (a) are not necessarily intended to be complete descriptions of all applicable terms, conditions, and exclusions of the policies referenced, (b) are provided solely for general informational purposes, and (c) should not be viewed as a substitute for legal, regulatory, or other advice on any particular issue or for any particular reason. The advice of a professional should always be obtained before purchasing any insurance product or service, and you should not rely on the information provided herein for the prevention or mitigation of risks or as a full and complete explanation of coverage under any insurance policy. While the information contained herein has been compiled from sources believed to be reliable, no warranty, guarantee, or representation, either expressed or implied, is made as to the correctness or sufficiency of any representation contained herein.
© Acrisure, LLC. All rights reserved.
Related Content
January 13, 2021
5 Steps for Year-Round Benefits Engagement
Open enrollment is something you probably only think about a few times a year. For employees, it might be even less often. And that’s unfortunate because that means employees may not be maximizing their benefits. That’s why it’s important to touch on benefits throughout the year—to ensure employees are making the most of them.
January 4, 2021
New COVID-19 Relief Bill: Highlights for Employers
On December 27, 2020, President Trump signed into law the much-anticipated COVID-19 relief bill (the “Bill”), which was approved by Congress a week earlier. The Bill, a follow-up to the March 2020 CARES Act, provides a second round of stimulus dollars and economic relief measures; it also contains several provisions of particular importance to employers.
December 23, 2020
What We Know So Far: Understanding the $900B Stimulus Package
On Monday, Dec. 21, 2020, Congress passed an emergency stimulus package designed to deliver approximately $900 billion in COVID-19-related aid. The bill, which was part of a $1.4 trillion spending package that will keep the government open for the fiscal year, has been sent to President Donald Trump, and he is expected to sign it into law.
December 8, 2020
Acrisure Unveils New Tech-Enabled Brand
Acrisure, one of the world’s top-10 insurance brokers, today unveiled its new brand identity which underlines its unique combination of financial strength, industry expertise and global distribution power with the integration and deployment of best-in-class artificial intelligence and technology.
December 2, 2020
Benefits Update: December 2020
The Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued a final rule that imposes new transparency requirements on group health plans and health insurers in the individual and group markets.
November 19, 2020
Study Finds That Workers’ Compensation Mega Claims Are on the Rise
While any workers’ compensation claims can result in costly ramifications for your organization, one category of claim in particular—known as a “mega claim”—has the potential to carry significant consequences.
November 11, 2020
Coverage of COVID-19 Vaccines: Agencies Issue Interim Final Regulations
As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed into law in March 2020, most group health plans are required to provide no-cost coverage for COVID-19 preventive services, including vaccinations.
November 3, 2020
Acrisure Perspective: 6+ Million Households & Property Owners Could Be Underestimating Their Flood Risk
According to the insurance professionals at Acrisure’s Agency Partners, we believe that this disparity points to a worrisome trend: more than 6 million households and property owners could be underestimating or unaware of the extent of their flood risks.
October 27, 2020
Success Tips: Performance Reviews With Remote Employees
Performance reviews are traditionally conducted in-person, on a recurring basis. But, amid the COVID-19 pandemic, most businesses have at least some employees working remotely.
October 21, 2020
Staying Connected in the Time of COVID-19
The need for social distancing has put a pause on normal socializing activities, like family get-togethers, restaurant outings and music concerts. As the pandemic continues, social distancing doesn’t need to mean social isolation.