Glossary

The limit is the credit limit underwritten by the credit insurer for the receivables of the policy holder from its customers (buyers). It is based on the creditworthiness of the respective buyer.

Loss ratio
The loss ratio is the ratio between the indemnity paid out in the given insurance year and the premium paid.

Maximum liability
This is the maximum amount that the insurer is liable to pay in respect of all losses in a given insurance year.

Costs that a solicitor or a debt collection agency charges the policy holder for extra-judicial or judicial debt collection. Extra cover may be taken out with the insurer to cover such costs.

The period agreed by the insurer and policy holder within which the policy holder's customer must pay the invoice in order for negative effects on the insurance cover to be avoided (suspension of cover). The maximum extension period starts on the invoice date. The maximum extension period is specified in the insurance policy and may differ from country to country. The credit limit notification may specify a different maximum extension period.

The policy holder has concluded a master agreement with the insurer. The policy holder must offer all buyers in the agreed countries with receivables above the discretionary limit to the insurer for cover. The policy holder is not entitled to select which buyers to offer for cover. For reasons of risk spread, the obligation to offer all business for cover applies to “good” and bad” buyers alike.

In credit insurance, there is an insured event called “payment default”. If the insured receivable has not been paid in full despite due debt collection by a debt collection agency or a solicitor six months after launching debt collection measures, “payment default” occurs. The precise rules are set out in the supplementary clause on “payment default”.

The payment term is the length of time that the supplier gives its customer for payment of the delivered goods, e.g. 30, 90 or 120 days.

The policy forms part of the insurance contract between the policy holder and the insurer.

The policy holder is the customer of the insurer and enters into a contract with the insurer.

Please see our PRISMA Veto product page for more information about preferential payment insurance.