Chubb Offers Trade Credit Insurance.

Chubb Group of Insurance Cos. has added a trade credit insurance policy to its Multinational Resource Group of products. The insurance provides coverage for merchandise shipped or services rendered on credit to commercial customers. The coverage kicks in when the customers are unable to provide timely and adequate compensation, due to insolvency, currency fluctuations, general economic decline or other contingencies.

The current domestic and global environments present many financial challenges arising from economic uncertainty and cross-border exposures.

"An assurance of payment policy not only provides peace of mind, but also can strengthen an organization's balance sheet from the viewpoint of lenders, investors and shareholders," said Peter Aitken, a vice president of Chubb & Son and co-manager of trade credit insurance. "Increasingly, companies are integrating trade credit insurance into their overall financial, credit and risk-management strategies and are, in effect, unleashing the power of their accounts receivables."

Aitken recommends the trade credit policy for manufacturers, processors, distributors of goods, and service companies that already sell on credit terms or are anxious to offer competitive payment terms to customers by moving away from highly secured forms of repayment such as letters of credit.

The trade credit policy also can be tailored to each policyholder's needs. A policyholder can insure its domestic and/or foreign sales and either all credit customers or only key customers above a specific sales volume.

Because the U.S. economy is currently taking a downturn, business is beginning to see more corporate bankruptcies and delinquent loan situations. The trend toward mergers and acquisitions also creates a market where one company can have a smaller number of key customers and, therefore, a greater concentration of risk, said Wayne Bayer, a vice president of Chubb and co-manager of trade credit insurance.