| Banks and financial institutions are
users of both credit and political risk insurance policies. For SME corporate clients where the bank is funding the business, it is increasingly common to evidence the bank as a Loss Payee or even Joint Insured under the credit insurance policy. When a bank knows that a third or perhaps even more of a corporate client’s turnover comes from receivables from one buyer, funding is often contingent upon adequate security on the potential insolvency or protracted default of that buyer. As a Loss Payee, the bank has rights to any claim payment made by the insurer. As a Joint Insured, the bank has deeper involvement and has equal responsibilities under the insurance agreement. Banks specialising in trade finance are likely to be heavy users of both credit and political risk insurance. The use of such insurance can be to share the risk with another entity in the form of an insurance company in order to provide capacity for an individual obligor or country or range of obligors and countries. IRC Europe has experience of placing corporate risk policies in the marketplace for financial institutions seeking cover for their clients’ buyer and country risks, allowing them to discount receivables with sufficient security against commercial and political risks. |
 "banks specialising in trade finance are likely to be heavy users of both credit and political risk insurance" |