A large portion of the commodity business is conducted on open account basis.
On the sales side, competition is fierce, particularly in the oil sector, given the limited number of buyers. Being able to secure insurance capacity early for challenging counterparties (and maintain it) is often crucial to win business. IRIA is in the market every day tracking buyer capacity for its trader clients.
On the purchasing side, the competitive origination of commodities often requires traders to prepay suppliers or enter into tolling or processing agreements. These performance and financial risks must be covered. IRIA is actively involved in the covering of prepayment, tolling and processing contracts.
We arrange cover for traders’ counterparty risks on a one-off basis as well as under framework facilities. IRIA has established and operates a number of large-scale trader facilities enabling us to rapidly cover a wide number of buyer and supplier default risks in emerging markets and industrialized economies.
Commodity trading often requires maintaining inventory at origin or at destination in high risk countries. These inventories are exposed to numerous political risks such as war, confiscation, expropriation, export / import restrictions, etc. We arrange cover for these inventories in the political risk insurance market.