Commercial trade credit insurance is an effective instrument available to companies to protect their account receivables against the risk of protracted default and insolvency of their clients, thereby guaranteeing one of their most important assets.

 

 Protracted Default: It covers risks resulting from credit transactions and dishonor by protecting creditor (supplier of goods) from the loss caused by credit transactions.

 

 Insolvency: It has contributed to the economic development by maximising advantages of credit transactions in Europe since the 18th century.

 

It responds positively to the changing market since market is changing from seller's market to buyer's market with the development of economy and the form of transactions is also changing from security or guarantor-based transactions to credit transactions based on credit assessment.