Download Trade Credit Insurance

UNLOCKING THE VALUE OF
TRADE CREDIT INSURANCE IN
GETTING YOUR PRODUCTS AND
SERVICES TO THE MARKET
TCI OVERVIEW
• WHAT IS Trade Credit Insurance (TCI)?
Trade Credit Insurance facilitates trade;
allowing suppliers to sell goods and
services without having to worry about not
being paid by their customers
TCI OVERVIEW
 TCI offered by EXIM Bank covers both foreign
and domestic receivables against commercial
and political risks of non-payment by buyers
 Coverage of commercial risk is automatic,
however coverage of political risk attracts an
additional premium
TCI OVERVIEW
 Commercial Risk: Risk of non-payment as a
result of bankruptcy/insolvency of buyer, the
buyer’s repudiation of the debt or the buyer’s
protracted default
 Political Risk: Risk of non-payment for political
reasons, e.g. war/civil disturbance, exchange
transfer, cancellation of import/export licence
TCI OVERVIEW
• Eligible Transactions
The product is available only to companies
registered in Jamaica and covers:
Export sales of goods and/or services
Domestic sales of goods only
3rd country sale of goods originating
outside of Jamaica, on behalf of Jamaican
companies
TCI OVERVIEW
• Eligible Transactions (cont’d)
Sale of goods supplied by subsidiaries of
Jamaican companies located and
operating within CARICOM
Sale of goods transhipped from Jamaica’s
duty-free zones to countries within the
Caribbean region
FEATURES OF TCI
• Risk Coverage
Commercial Cover
 EXIM Bank covers 85% and the Insured bears the
remaining 15%
Political Cover
 EXIM Bank covers 90% and the Insured bears the
remaining 10%
FEATURES OF TCI
• Premium Rate
Policyholders are assigned a single composite rate
covering commercial risk for both the export and
domestic markets
 Basic premium rates range between J$0.54 - J$0.60
per J$100.00 of gross invoice value of each
shipment.
 Political cover attracts an additional rate that may
range between J$0.03 – J$1.45 per J$100.00
FEATURES OF TCI
• Credit Limits
Under the terms of the TCI Policy coverage is
available under the following Limits
 Discretionary Limit
- US$3,000.00 for unsecured transactions
- US$5,000.00 for secured transactions
FEATURES OF TCI
Special Buyer Credit Limit (SBCL)
For all transactions exceeding the Discretionary
Limit, the policyholder is required to apply for a
SBCL which is determined based on an assessment
of the buyer’s financial status and creditworthiness
Why TCI?
In answering this question here are some
questions to consider:
 Have you ever experienced credit losses,
especially with buyers overseas?
 Do you regularly sell to new customers and
markets?
 Are you concerned about the credit or
country risk associated with growing your
customer base overseas?
Why TCI?
Receivables are often the largest uninsured
asset on a company’s balance sheet even
though it may also be the primary source of
revenue.
In the same way that a company considers it
prudent to insure its fixed assets, it is also in
its best interest to insure its receivables, the
base of its existence
Access to Working Capital Financing
Insurance Policy Discounting Facility (IPDF)
A major benefit of TCI is the potential access to
post-shipment working capital financing, as the
policy can be used as collateral for the Bank’s
Insurance Policy Discounting Facility (IPDF)
Access to Working Capital Financing
Insurance Policy Discounting Facility (IPDF)
Under the IPDF the policyholder may discount up to
80% of its receivables, under an approved revolving
credit limit
 This credit limit is based on an assessment of the
policyholder’s financial status, as well as the
approved Special Buyer Credit Limits
 Loans are extended for a maximum period of 120
days
Key Values of TCI
Having a TCI policy allows you to sell with
confidence, safeguarding your company against
the risks of domestic or overseas customer
insolvency and non-payment
 Marketing Tool
- Facilitates expansion into new untapped markets
- Allows flexible credit terms & competitive pricing
- Allows better credit control against catastrophic bad
debt losses
Key Values of TCI
 Financing Tool
- Access to bridge financing while you await payment of
outstanding receivables
- Improved cash flows
 Risk Management Tool
- Protects your company from bad debt and insolvency