How Much Does Trade Credit Insurance Cost?

At Rowland Hames, we take the time to understand your trading model before approaching insurers, ensuring that any indication of cost reflects your real exposure rather than a generic estimate.

How Are Trade Credit Insurance Premiums Calculated?

Trade credit insurance is usually priced as a percentage of your insured turnover. The precise rate depends on a range of underwriting considerations.

Insurers will look closely at:

• Your industry sector and its current market outlook
• The size of your annual turnover and the proportion sold on credit terms
• The spread of your customer base, including any concentration risk
• Your previous bad debt experience
• The strength of your internal credit control procedures
• Whether you trade solely within the UK or also export overseas
• The structure and scope of the policy required

Every business presents a different risk profile. Two companies with similar revenue figures may receive very different premium terms depending on their customers, sectors and historic experience.

Our role as independent advisers is to present your business clearly to insurers and obtain terms that reflect your actual level of risk.

Does Past Financial Performance Affect the Premium?

Insurers will review your financial history and previous receivables performance as part of the underwriting process. A history of bad debts does not automatically mean that cover will be declined or that premiums will be excessive.

Underwriters also consider the wider context. Improvements to credit control procedures, diversification of your customer base, changes in market demand and the overall outlook for your sector can all influence the final terms offered.

This is why a properly structured submission is important. A well-presented case often results in more competitive and appropriate pricing.

Is Trade Credit Insurance Worth the Investment?

For many businesses, outstanding invoices represent a substantial proportion of working capital. In some sectors, trade debt can account for a significant percentage of total business assets. When a major customer fails, the impact can be immediate and severe.

Trade credit insurance provides protection against that exposure, helping to stabilise cash flow and safeguard profitability.

Beyond claims protection, many clients find that the value of a policy extends further. Having insured receivables can strengthen relationships with lenders, improve funding flexibility and provide the confidence to offer competitive credit terms to new customers.

In practical terms, this can support both revenue growth and profit protection without materially increasing financial risk.

When Should a Business Consider Trade Credit Insurance?

Trade credit insurance is particularly relevant for businesses that:

• Offer extended credit terms of 30 days or more
• Rely on a small number of key customers
• Operate in sectors where insolvency risk is heightened
• Are expanding into new domestic or overseas markets
• Require stronger support from banks or invoice finance providers

If your accounts receivable represent a material asset on your balance sheet, protecting them should form part of your wider risk management strategy.

Independent Advice from Rowland Hames

As an independent broker, Rowland Hames works with a range of specialist trade credit insurers. Our focus is not simply on price, but on securing appropriate cover structured around how your business actually trades.

We provide clear guidance on policy wording, credit limits, excess structures and claims procedures, ensuring you understand exactly what protection is in place.

If you would like to explore the potential cost of trade credit insurance for your business, we would be pleased to arrange a confidential, no-obligation discussion.