Trade Credit Insurance Calculator

Trade credit insurance transfers the risk of a business customer failing to pay an invoice. This calculator takes the annual value of sales made on credit terms together with the premium rate quoted against them, and returns the annual premium alongside the maximum claimable amount, the deductible, and the two percentages restated. The premium itself is a single multiplication of sales by rate, so at 10,000,000 of credit sales and a rate of 0.3% the annual cost is 30,000.

The coverage percentage is the share of an unpaid debt the insurer pays out. ICISA, the international association for credit insurers, puts the usual range at 75% to 95% of the invoice amount, varying with the cover purchased. This calculator applies that percentage to the whole annual book rather than to a single invoice, so the 9,000,000 reported at the default 90% is the ceiling if an entire year of credit sales went unpaid, not a per-claim limit. The deductible works the same way: 10% of 10,000,000 gives 1,000,000 of retained exposure.

Two things follow from those percentages being independent inputs. They are not forced to complement each other, so a coverage figure of 100% alongside a deductible of 30% returns 10,000,000 claimable and 3,000,000 retained against a 10,000,000 book, arithmetic the tool performs without objection but which no policy would describe. And neither percentage alters the premium here, although retention is one of the factors an insurer prices on. The wider category this sits within, export credit and investment insurance, covers cross-border non-payment of the same kind, where the buyer's country adds political and transfer risk on top of the commercial risk of insolvency.

A worked example

With the defaults of 10,000,000 in annual credit sales, a premium rate of 0.3%, a deductible of 10% and maximum coverage of 90%, the annual premium is 30,000, the maximum claimable is 9,000,000 and the deductible is 1,000,000. The rate is the only lever on cost: at the tool's minimum of 0.1% the same book costs 10,000, and at its maximum of 2% it costs 200,000. Sales scale the premium linearly, so a 2,000,000 book at the same 0.3% costs 6,000 while carrying a 1,800,000 ceiling with 200,000 retained.

What moves the number most

Only two of the four inputs move the primary result. Annual credit sales and the premium rate multiply together to produce it, each of them linearly, so doubling either doubles the premium. The deductible and coverage percentages leave it untouched: at the default sales and rate, a deductible of 0% and a deductible of 30% both return 30,000. What those two inputs move instead is the pair of exposure rows beneath the premium, which is a separate question from cost.

The formula behind this

Three independent relations sit behind the outputs. The annual premium is credit sales multiplied by the premium rate as a decimal. The maximum claimable is credit sales multiplied by the coverage percentage. The deductible is credit sales multiplied by the deductible percentage. Each takes the same sales figure as its base and nothing passes between them, which is also the limit of the model: it accounts for no claims history, no buyer-level credit limits, no country risk loading, no minimum premium, and none of the policy exclusions that determine whether a particular debt qualifies at all.