Trade credit insurance cost in Singapore: what sets the premium
How is a trade credit insurance premium calculated?
Trade credit insurance pays when a buyer fails to pay an invoice because of insolvency or protracted default. Protracted default means the buyer has not paid by an agreed number of days past due. The policy prices the risk that any insured buyer stops paying.
The insurer starts with insured turnover. That is the credit sales to the buyers the policy covers, usually for 12 months. It applies a rate to that figure. The rate reflects the spread of buyers, the sector, the countries sold into and the insured's own history of bad debts. Allianz Trade states on its Singapore cost page that turnover and risk diversification are the two main inputs.
Most policies carry a minimum premium. A business with S$2 million of insured turnover may pay the minimum rather than the rate times turnover. The policy also sets an insured percentage, a maximum liability for the year and credit limits on each buyer. Each of these moves the premium.
A business pays a deposit premium at inception. It declares actual turnover during or after the year. The insurer adjusts the final premium to the declared figure. This is why the broker asks for a sales forecast by buyer and country before quoting.
What percentage of each invoice does the policy pay?
The policy does not pay 100% of an unpaid invoice. It pays an insured percentage of the loss within the credit limit set on that buyer. The insured keeps the balance. Allianz Trade lists the percentage of risk covered per transaction as a factor that changes the premium.
The insured percentage is a term the buyer of the policy chooses with the broker. A higher percentage costs more. A lower percentage costs less and leaves more loss with the business. The insured's retained share keeps the business careful about who it sells to on credit.
Three terms set what is paid on any one buyer.
- Credit limit. The maximum the insurer will pay on that buyer. Sales above the limit are uninsured.
- Insured percentage. The share of the loss within the limit that the insurer pays.
- Maximum liability. The most the insurer pays across all buyers in the policy year, often a multiple of premium.
A business with one buyer at 40% of sales needs to check the credit limit the insurer will grant on that buyer. If the limit is below the exposure, the premium buys less than the turnover figure suggests.
What sets trade credit insurance cost in Singapore: seven factors
Allianz Trade's cost page for Singapore names the factors below. The direction of each is the market convention a broker sees in quotes.
| Factor | Effect on the rate |
|---|---|
| Policy type and insured percentage | Whole-turnover with a lower insured percentage costs less per dollar of sales than single-buyer cover at a high percentage |
| Past losses | Bad debts in the last 3 years raise the rate |
| Financial history of the insured | Weak accounts raise the rate or shorten terms |
| Industry | Sectors with long payment cycles or thin margins pay more |
| Buyer standing | Rated, audited buyers lower the rate; unrated buyers get smaller limits |
| Country of buyer | Sales to markets with payment transfer risk cost more |
| Political risk | Cover for war, expropriation or currency inconvertibility adds premium |
Trading terms also matter. Open account at 90 days carries more risk than 30 days. Sales against letters of credit are often excluded from insured turnover, which lowers the premium.
Whole-turnover vs single-buyer cover
The two policy shapes price differently because the insurer's exposure differs.
| Feature | Whole-turnover policy | Single-buyer policy |
|---|---|---|
| Buyers covered | All credit customers, or a defined group | One named buyer |
| Rate on turnover | Lower per dollar, spread across many buyers | Higher per dollar, one point of failure |
| Credit limit work | Insurer sets limits on each buyer | One limit, often with a detailed credit review |
| Minimum premium | Applies | Applies, and often dominates |
| Typical use | Businesses with 20 or more credit customers | Concentration on one large buyer or one contract |
Single-buyer cover is not cheaper in rate terms. It is cheaper in absolute dollars only because the insured turnover is smaller. Insurers also decline single-buyer cover more often, because the buyer of the policy knows more about the risk than the insurer does.
Worked example: S$8 million of insured turnover
The figures below are an example. The rate is not quoted because insurers set it case by case.
A Singapore distributor sells S$8 million a year on 60-day terms to 30 buyers. Its largest buyer takes S$1.6 million a year. Average receivables outstanding are about S$1.3 million. The broker places a whole-turnover policy with an insured percentage of 90% and a credit limit of S$400,000 on the largest buyer.
The largest buyer enters liquidation owing S$520,000. The claim works as follows.
- Loss within the credit limit: S$400,000. The S$120,000 above the limit is uninsured.
- Insured percentage 90%: the insurer pays S$360,000.
- The distributor absorbs S$160,000 in total.
Had the broker secured a S$600,000 limit, the payout would have been S$468,000. The credit limit, not the headline turnover, decides what the policy pays on the buyer that matters.
Does EnterpriseSG still subsidise the premium?
The Trade Credit Insurance Scheme supported 50% of the minimum premium on policies from Singapore-registered credit insurers. Support was capped at S$100,000 per company in aggregate. The EnterpriseSG factsheet set turnover of the applicant and its subsidiaries at no more than S$100 million, with paid-up capital of at least S$50,000.
The latest extension the broker can trace ran to 31 March 2021. Current availability has to be confirmed with EnterpriseSG before any quote relies on it.
A separate route is the Enterprise Financing Scheme Trade Loan. It is a loan, not insurance. EnterpriseSG shares 50% of the default risk with the bank, or 70% for young enterprises and challenged markets. The loan quantum is up to S$50 million per borrower group across all EFS facilities, repayable within 1 year. Eligibility requires at least 30% local shareholding and group turnover of no more than S$500 million. Enhancements take effect on 1 April 2026.
Why is the price rising?
Compulsory liquidations in Singapore reached 307 in 2024, the highest in the SingStat series back to 2006. The count rose again to 392 in 2025, with 492 applications filed. Credit insurers price off this data. More insolvencies mean more claims and tighter credit limits.
The domestic general insurance market grew 8.4% to S$6.09 billion in gross written premium in 2025. Claims paid rose 8.7% to S$1.8 billion. Credit insurance is a small part of that total, but it moves with the same cycle.
A broker prepares the submission to counter this. A clean buyer ageing report, a written credit policy and 3 years of bad-debt history support a lower rate. See the trade credit page for what the submission needs.
Frequently asked questions
How is a trade credit insurance premium calculated?
The insurer applies a rate to insured turnover for the policy year. The rate reflects the spread of buyers, sector, countries and the insured's loss history. A minimum premium applies. The final premium is adjusted to declared turnover at year end.
What percentage of an unpaid invoice does the policy pay?
The policy pays an insured percentage of the loss within the credit limit on that buyer. The insured keeps the balance. The percentage is a policy term chosen at placement, and a higher percentage raises the premium.
Does EnterpriseSG still subsidise trade credit insurance premiums?
The Trade Credit Insurance Scheme supported 50% of the minimum premium up to S$100,000 per company. The last extension the broker can trace ended on 31 March 2021. Confirm current availability with EnterpriseSG before relying on it.
Is single-buyer cover cheaper than whole-turnover cover?
Single-buyer cover carries a higher rate per dollar of turnover because one default is the whole loss. It costs fewer dollars only because the insured turnover is smaller. Insurers decline single-buyer requests more often.
Sources
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.