Whole Turnover Insurance
With whole turnover insurance, an underwriter contracts to cover all eligible business transacted by a policyholder within an agreed period -- usually 12 months. Underwriting control is exercised primarily through a credit limit set for each buyer covered. For larger limits, the figure is set specifically by the underwriter, but it is common for policyholders to have discretion to set limits for the majority of their customers on the basis of their credit and collection procedures.

The level of indemnity is high -- usually 80% to 95%, with some underwriters giving a higher percentage of cover for vetted customers as compared to discretionary limits. Premium is payable as a percentage of insured turnover, which must be declared monthly, quarterly, or annually by the policyholder. Whole turnover policies can be based upon domestic or export trade, or a mixture of both. Underwriting is done on the basis of previous loss records, future turnover and trade expectations, and the quality of customers.

Catastrophe Cover
Catastrophe cover protects against losses substantially over and above the normal level of bad debt that a particular company would expect to sustain. This is done by setting an aggregate first loss for the whole period of the policy. Any loss in excess of this deductible would be indemnified -- as much as 100% -- up to an agreed maximum liability. Premiums can be set as a flat fee per annum.

Single-buyer Risks
Cover can be purchased to insure a single-buyer invoice or invoices during a predetermined period of time.

Single-buyer cover provides a credit limit within which an underwriter covers all trade with the client’s customer. Cover is for all deliveries within the policy period.

Top-customer Cover
A company may decide to cover only its top customers -- those that would be likely to cause major disruption to the business if they were unable to pay their debts. Top-customer cover offers flexibility, either in the form of a policy covering the top 10-20 customers by amount outstanding, or covering selected customers. Policies are usually available either as an annual contract or can be tailor-made to fit a specific contract or order.

Captives and Group Programs
Many large organizations are able to take advantage of consolidating the buying power of their individual companies in global locations to secure favorable pricing and policy structure through the use of captives.

A captive is an insurance company formed by an industrial or commercial group to insure some or all of the group's risks. The captive concentrates buying power with the insurance market on behalf of its owners, manages group risk retention, and reduces premium payments to third parties to a minimum.

For a captive to operate successfully, a broad spread of receivables is required. In the right circumstances, the benefits of using a captive can be substantial, reducing costs and improving the quality of coverage. The credit insurance market can be used to provide reinsurance support, with the option of either using the credit limit processes of the specialist underwriters or following the catastrophe approach, in which cover is geared to the internal judgment and procedures of the insured.

Marsh specializes in captive policy design for multinationals, and routinely places business with traditional and emerging underwriters.

Medium-term Risk
A number of insurance companies specialize in providing selective and tailored cover against country, timing, and performance risks. These risks may include confiscation; expropriation and nationalization; unfair calling of bonds; or contract frustration.

Cover for export projects and credits of longer than two years may be available from government and multilateral agencies, often on a case-by-case basis. For loan or equity investment in other countries, cover against non-commercial risks (i.e. confiscation, war, and inability to transfer profits or dividends) is available from both private sector underwriters and the official agencies.

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