CCP Credit Insurance & Risk Mitigation Flashcards
6 cards from real CCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CCP Credit Insurance & Risk Mitigation flashcards as text
What is the primary purpose of trade credit insurance in a B2B credit management program?
Answer: To protect the seller against buyer insolvency or protracted default
Trade credit insurance protects the insured seller against loss when a buyer fails to pay due to insolvency or protracted default, not to eliminate credit analysis.
Which term describes the percentage of the invoice value NOT covered by a trade credit insurance policy?
Answer: Co-insurance percentage
The co-insurance percentage (often 10–20%) is the portion of the insured amount the policyholder bears, aligning their incentive to manage credit risk prudently.
A credit manager wants coverage for a buyer that exceeds the insurer's approved credit limit. What option can the insurer offer?
Answer: Discretionary credit limit (DCL)
A discretionary credit limit allows the insured to extend coverage up to a set amount without prior insurer approval, subject to internal credit guidelines.
What is 'whole turnover' coverage in trade credit insurance?
Answer: A policy that covers all or most of the seller's domestic and export receivables
Whole turnover policies spread risk across the seller's entire or most of their buyer portfolio, which allows insurers to offer lower premiums through diversification.
Which factor most directly affects the premium rate a trade credit insurer will quote?
Answer: The buyer's payment history and industry sector risk
Insurers assess buyer creditworthiness and sector risk to price premiums, since buyer default is the event being insured against.
Under a typical trade credit insurance policy, what is the 'waiting period'?
Answer: The period after an invoice due date that must elapse before a protracted default claim can be filed
The waiting period (often 90–180 days after the due date) must pass before the insured can file a protracted default claim, distinguishing slow payment from actual default.