Credit insurance is an insurance that guarantees businesses against the risk of non-payment by its buyers through a variety of causes of loss.
Insurers distinguish between the protection of specific transactions capital goods, turnkey contracts, etc that have long credit periods, and short-term credit insurance ie those with credit periods of less than 180 days. The observations that follow relate to short-term credit insurance.
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Short-term credit insurance is based on the principle of spread of risk the insurer requests that the policyholder cover all of its buyers or at least a significant number of them to ensure an adequate spread of risk. The insurer then provides protection against...