how is the premium calculated?
Receivables Insurance is priced on the basis of standard actuarial techniques. It is sold mostly on a whole turnover basis (whole turnover cover policy) and premium rates are generally given as a percentage of the company’s turnover (including financially sound and weak customers). Obviously, the future turnover is not known at inception and so the premium is not known either. Therefore, a minimum premium amount is usually an integral part of the contract.