HDFC ERGO, India’s third-largest non-life insurance company and a joint venture between bank HDFC and insurance conglomerate ERGO, has introduced a new insurance product for B2B suppliers.
In an announcement last weekend, HDFC ERGO General Insurance Company announced the launch of its Trade Credit Insurance Policy, a way to insure trade credit for suppliers in case corporate buyers fail to settle their debts. According to the firm, trade credit insurance is particularly important in a globalized B2B trading environment.
“With the advent of globalization, trading opportunities have grown manifold, which, in turn, has made managing receivables even more complex,” explained HDFC ERGO Executive Director Anuj Tyagi. “No industry or company is immune from trade credit risk, and the failure of a buyer to pay for the goods or services purchased can have a catastrophic impact on the viability of a supplier.”
“Trade Credit Insurance will provide a safety net for supplier to do business with peace of mind,” the executive continued. “The policy acts as a risk mitigation tool, playing a pivotal role in the trading cycle of a company by protecting its profit, cash flows, sales growth, the balance sheet and a company’s customer base.”
The company further highlighted the potential for nonpayment to force a supplier into insolvency. According to reports, the Trade Credit Insurance Policy allows a supplier to obtain insurance against buyer default. The insurance blankets a supplier’s portfolio of corporate clients and pays an agreed-upon percentage of an invoice that goes unpaid.
The policy covers invoices that go unpaid due to buyer insolvency, as well as protracted default, in which a buyer fails to pay a bill within an agreed-upon timeframe.
HDFC ERGO noted that its newest product is available to businesses of all sizes in India.