Summary of the Presentation to Canada Poland Chamber of Commerce, September 28 2017, on behalf of Receivables Insurance Association of Canada (RIAC)

Official Event – Platinum Sponsor LOT Polish Airlines.

What Does CETA Agreement Deliver?

    With the implementation of CETA agreement, Receivables Insurance Association of Canada encourages their client companies to reduce financial risks, improve cash flows, support credit management and improve sales between Canada and the EU using Receivables Insurance (RI). It is a good timing, as before Canada-EU free-trade treaty provisionally took effect on September 21 2017, only 25% of goods were tariff-less, and afterwards, upon entry into force, 98% of duty lines are already eliminated. Most of the tariffs on the remaining 2% of goods will be gradually removed within 7 years (for further details, please check further information on

     Recently, Canadians have an open access with over 500 million of potential customers in the 28 EU member states, including the UK. This market openness should boost around 80,000 new jobs for Canadians in domestic economy and at the same time, it is projected to add nearly $12 billion for Canadian industries such as pharmaceuticals, metals, medical devices, information and communication technology, forestry, fish (and seafood) sector, aerospace, agriculture, and automotive sectors.

    In addition, CETA treaty provides bigger profit and revenue, further diversification of customer portfolio, more competitive advantage against companies that are not labelled under the treaty, and more simple rules of origin* than under NAFTA free-trade agreement between Mexico, the US and Canada.

    It is a great advantage for European companies to penetrate North American market through Canada amid annulment of negotiations by American Donald Trump’s administration on finalizing the free-trade agreement between the US and Europe (TTIP) .

 *Rules of origin – refer to products made in Country A, while its materials are manufactured and imported from Country B

Why Does Receivables Insurance Matter?

     Accounts Receivable generally represent between 40% and 70% of companies’ assets. As less than 6% of Canadian businesses use Receivables Insurance, we must note that client companies are vulnerable to sudden business fluctuations or bankruptcies, especially when companies expand markets and enter international scene. The purpose for Receivables Insurance is to protect client companies from two types of risks – Commercial Risk and Political Risk.

    Receivables Insurance covers Commercial Risks, such as bankruptcy and protracted default that involves non-payment within 6 months of due date (NOTE that for some industries such as cruise lines, Receivables Insurance can deal with cases involving non-payment within more than 6 months of due date). However, RI do not cover any business dispute .

     Receivables Insurance also covers Political Risks, such as political/economic events blocking proper payment, government legislations delaying release of funds, government action preventing performance of the contract or civic turmoils, such as insurrection, war or natural disaster.

     That is why Receivables Insurance is important in order to grow sales, to protect equities and to ensure stable profitability, as 80% of companies’ business comes from 20% of its customers.

    Receivable Insurance sector is significant as it includes notable companies such as Zurich, Export Development Canada, The Guarantee, AIG, Red Rock and others. The growth is imminent for Receivable Insurance as the GWP (Gross Written Premium) is comparatively small in the USA and Canada, and can easily expand in the ‘shrinking world’.

How Does Receivables Insurance Work?

   To calculate cost and insurance coverage, Receivables Insurers must be provided with information on industry, sector, bad debt history, their credit granting procedures and the countries in which the buyers reside. (PLEASE NOTE that a receivables insurance policy usually has the same conditions of cover over many markets just as, for example, car insurance companies have same terminologies and regulations in all countries.). However, Receivables Insurance usually allows all customers to make their own credit decisions and to do credits checks although for larger credit decisions, insurers must make their own assessment.

    In addition, it is a possibility that developing countries in Europe such as Bulgaria and Romania can bring corruption. Receivables Insurance companies are required by the government to track, monitor, and investigate any hints of corruption or fraud, through databases and online systems with specific criteria and policies. In fact, the state-owned Export Development Canada demands companies to sign oath, and abolishes ties with specific client firm, with detected corruption. Unfortunately, no system is fool-proof and businesses must be diligent in their transactions so as to avoid situations that can lead to financial or legal disaster.

   Finally, Receivables Insurance companies meet every 4 months to brainstorm new ideas to further promote new ideas for the protection of receivables.


CETA CPCC News | By Konstantin K. Manyakin, CPCC Intern
European Studies Graduate (EURUS Program), Carleton University & Young European Federalists (JEF) member


Middleton, J (2017). CETA: Embracing The Opportunity But Not The Risk [Power Point slides]: Retrieved from the Presentation to Canada Poland Chamber of Commerce, September 28, 2017

Special thank you to our Facility Sponsor Uber and Official Event Platinum Sponsor LOT Polish Airlines.

We also want to extend our gratitude to Receivables Insurance Association of Canada (RIAC) for all of the information. Click here to download their full presentation, CETA: Embracing the Opportunity but, not the Risk and click here for a one-pager on Understanding Receivables Insurance.