Name: Whole-Turnover Insurance
Brand: Alan Boswell Group
Rating: 4.9 (1420 reviews)

A large number of credit insurance policies are written on a whole-turnover basis, particularly in the SME and mid-market arenas.

This means you provide the insurer with a forecast of your annual turnover but you can exclude customers where you get paid before the goods are despatched or the customer is not a credit risk, such as government bodies. Additionally, the underwriter will allow you to exclude turnover with customers which can’t be insured due to their poor risk grade.

The resulting forecast, after deducting these items, is known as the insurable turnover and is used as part of the calculation to arrive at the premium cost.

The basis of a whole turnover policy means that you must apply for credit limits in respect of all customers i.e. you do not have the option to select ones you wish to insure and ones you do not. That said, an underwriter may agree for certain specific customers to be excluded due to their low risk grade i.e. blue-chip customers (publicly quoted companies in the main) and these exclusions will be noted on the policy.

The Alan Boswell Group Difference

We aim to ease the burden that arranging insurance can bring. We pride ourselves on our personal approach, providing a dedicated contact to review your situation and provide continuous expert advice for your business or personal needs.

How our customers rate us

Since partnering with Alan Boswell Group over ten years ago, we have received excellent account management with a proactive approach using intuitive knowledge of our business.

Louise Nevard - Head of Credit, Midwich Group PLC.

4.9/5 1420 reviews

Whole-turnover insurance in detail

Protracted default

The customer fails to pay an invoice over a protracted period (as defined in the policy) but has not yet been placed into insolvency.

Political events

The customer is solvent but is unable to pay due to a a political event triggered by a government action.

Insolvency

There are seven types of insolvency in the UK, but the key ones are: Administration, Company Voluntary Arrangement, Liquidation, and Bankruptcy. Export markets can have different definitions such as Chapter 11 in the US.

Insured discretionary limits

Most whole-turnover policies carry a facility for you to set your own credit limits below a certain level, typically £5,000 and above. Essentially the underwriter sets an inner policy limit within and also sets the criteria to justify such a credit limit. These criteria typically include one of the following methods:

Credit reports
Trading history
Bank references
Trade references

Policy excess

The underwriter will apply an excess to the policy, designed to filter out low level losses and / or to be deducted from a claim. These tend to range from £500 upwards and can be applied in a number of ways, impacting upon the claim payment.

Credit limits

Above the limit of discretion, you must apply to the underwriter for the required credit limit who will assess the financial information held for the customer and provide a limit decision. The decision provided may be below the the limit requested if the financial information does not justify the size of limit requested. All credit limits are monitored by the underwriter for changes in your customer's risk and you will be advised through an amended decision should the risk deteriorate. Generally speaking, nil decisions mean the risk is too high to justify any credit limit and will also cancel the limit of discretion.

Limit applications are generally made by using the insurer's online system.

Most underwriters offer credit limits that can be increased or reduced by either you or the underwriter. However, some underwriters will offer non-cancellable limits i.e. the underwriter is not able to cancel the credit limit. That said, the following reporting requirements will still apply to non-cancellable policy limits.

Reporting requirements

The underwriter sets a mutually agreeable “on stop” date within the policy. This date or period is normally a certain number of days past the invoice due date. Once a customer’s invoice breaches this date or period, you are obliged to report the customer to the underwriter. The credit limit is suspended or cancelled at this point and third-party debt collections must be taken. Should a customer show signs of financial distress ahead of the “on stop” date, the customers should be reported and placed “on stop”.

Once reported, some insurers include the benefits of their own debt collectors and solicitors, who may become involved to assist with the debt collections process with a contribution to such costs, sometimes up to 100%.