The first module of this certification established that the cause of default, not the nature of the debtor, decides which cover responds. Here we apply that rule to the case where it is hardest to hold: a private buyer, in a country under strain, that stops paying. With a public debtor, the state measure strikes the payer directly and the chain is visible. With a private debtor, the state almost never acts on it: it acts on its bank, on access to currency, on import authorizations, and the buyer becomes insolvent as a consequence. The cause is real and it is indirect, and that mediation is the whole difficulty of the file.
Two propositions must therefore be distinguished which look alike and are not worth the same: the buyer stopped paying DURING a crisis, and the buyer stopped paying BECAUSE OF a crisis. The first is a coincidence in time, and an insurer treats it as such. The second requires showing a chain, and the chain is told in three links rather than one: the public measure, its effect on this particular debtor, and the impossibility it placed it in. A badly run company that fails in a country in crisis remains a commercial failure, and the crisis does not retroactively turn it into a political loss.
The middle link is the neglected one, and it is the one that decides. An importer can be solvent, hold the cash, and be prevented because its bank no longer obtains a currency allocation. Another can be starved of revenue because its own public customers have stopped paying it. A third can no longer import the components its production depends on. These three paths lead to the same unpaid invoice and are not proved the same way: the first is documented at the bank, the second in the debtor's receivables ledger, the third in its customs records. Naming the path is what turns a context into a cause.
Then comes a product question few exporters ask before the loss: which insurer pays. It is common for one receivable to be covered by a credit insurance policy, which handles non-payment by a private debtor, and by a political risk policy, which handles public measures. Those two policies are not drafted by the same teams and do not define the loss in the same way. On a default with a mixed cause, each can maintain that the event belongs to the other, not out of bad faith but because each reads its own text. The insured then finds itself with two covers and no answer, which is harder to unblock than having no cover at all.
Other-insurance clauses in principle organize this concurrence, and their limit is well known: they allocate when both covers respond, they settle nothing when both decline. The only real safeguard predates the loss and lies in reading the two triggering-event definitions against each other, a thankless exercise that takes an hour at placement and becomes impossible afterwards. Notifying both insurers, simultaneously and within each one's deadlines, is the second useful step: it obliges nobody to pay, but it stops the discussion moving from the merits to a defect in notification.
A market fact must be added that changes how a refusal reads: on a private debtor, the limit granted is frequently revocable, and the insurer can cut or withdraw it during the year. A limit withdrawn at the start of a crisis is therefore not a judgment on that buyer's solvency; it is a portfolio decision taken on a country. The exporter that reads it as a risk signal about its customer sometimes gives up a sound relationship, and the one that ignores it ships uncovered. The right reading is to ask whether the withdrawal bears on the buyer or on the country, a question underwriters answer readily.
What is retained is a method of enquiry rather than a definition. Faced with a private buyer that stops paying in a country under strain, look first at what it keeps doing: paying wages, importing, honouring local suppliers. Then look for the link through which the public measure reached it, and document that link where it lies, at the bank, in its receivables or at customs. Finally notify under both policies where both exist. Only after those three steps does the question of characterization become arguable, and it is then argued on facts rather than on a context.
A French exporter sells 2.6 million euros a year to a private importer, a sound family company, in a country whose central bank introduced sectoral rationing of currency allocations in February. The importer pays punctually until January, then stops. It continues to settle wages and local hauliers, and its December 31 balance sheet showed comfortable cash. The exporter holds a credit insurance policy covering the debtor's insolvency and protracted default, and a political risk policy covering measures by a public authority preventing transfer. The credit insurer replies that the debtor is not insolvent; the political risk insurer replies that no measure targets this debtor. What does the exporter do?
Both refusals are coherent and that is precisely the problem: each reads its own text, neither is in bad faith, and the exporter holds two covers and no answer. The way out is not to plead the context, which proves nothing, but to name the middle link. The importer is not insolvent, its cash and its local payments establish that, which shuts the credit policy's door and, by the same movement, opens the other's: a debtor that has the funds and cannot transfer them describes precisely an impediment to transfer. What remains is to prove the measure reached IT, since the rationing is sectoral and does not name it. What must be obtained is the banking trace: the currency allocation application filed by its bank, its rank in the sectoral queue, the refusal or the absence of service. That document is requested as a fact and not as a reason, and it is requested now, while the relationship still allows it to be asked for. Two steps complete the file. Notify under both policies, within each one's deadlines, so that the discussion never moves from the merits to a defect in notification. And ask the credit underwriter whether any withdrawal of limit bears on the buyer or on the country, because the answer decides whether the exporter should keep supplying a sound customer or stop exposing an uncovered receivable.
- 01With a private debtor, the state acts not on it but on its bank, its currency or its imports: the cause is real and indirect.
- 02Stopping payment during a crisis and stopping payment because of a crisis are two distinct propositions, and only the second is covered.
- 03The middle link is documented where it lies: at the bank, in the debtor's receivables, or at customs.
- 04One receivable can be covered by two policies that both decline: other-insurance clauses allocate, they do not settle a double refusal.
- 05A limit withdrawn at the start of a crisis is a portfolio decision on a country, not a judgment on the buyer's solvency.