Each application is assessed and priced on the accuracy and depth of the information provided. Accordingly the premium cost of a credit insurance policy is determined by a combination of the following aspects of the applicants business:
- The previous bad debt experience
- The level of projected sales
- The trade sector
- The export markets and those countries' risk rating
- Analysis of the sales ledger by number and size of debt
- The credit standing of the principal customers
- The credit management system
The most common methods of charging premium are as a percentage rate on turnover or as a fixed amount.