IRDAI proposes changes in trade credit insurance norms

Trade credit insurance is an insurance policy offered by private insurance companies and governmental export credit agencies to business entities wishing to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy. Insurance Regulatory and Development Authority of India (IRDAI) said it proposes to allow issuance of trade credit insurance policy to RBI registered entities, for conducting factoring business in line with The Factoring Act, 2011. “This cover shall be restricted to short-term financing against receivables, representing supply of goods, materials and services,” said the exposure draft.