GLOSSARY

POLICY AMOUNT: the maximum amount which the insurer could be liable to pay in respect of all accounts receivable covered under the policy.

POLICY PERIOD: sales contracts and their related accounts receivable fall within the policy period, usually 12 months, based on the shipment date of the goods.

COMMERCIAL RISKS: events generally within the control of buyers such as:

• Insolvency: inability to pay for financial reasons
• Protracted default: failure or refusal to pay in due course
• Contract cancellation: arbitrary cancellation of contract by the buyer
• Repudiation: buyer fails or refuses to take delivery of goods.

POLITICAL RISKS: events generally outside the control of buyers such as: - acts of war - government restraint on currency movement - cancellation of import/export licences.

BUYER CREDIT LIMIT: a specific credit limit is established for each buyer, based on such things as its financial status and past trading experience. The insurer is not liable for amounts greater than the credit limit.

DISCRETIONARY LIMITS: in particular circumstances the insurer will authorize the insured's own credit department to set appropriate buyer credit limits.

DEDUCTIBLES: the amount to be paid by the insurer for a claim may be subject to various deductibles which are established between the insurer and the insured when the policy is written.

PREMIUM AND CHARGES: the policy premium is based on estimated annual sales and is revised periodically to account for actual sales. Approval fees are charged for each credit limit request.