EXPORT CREDIT INSURANCE – WHAT IS IT?

Export Credit Insurance provides risk protection to Exporters against payment default by foreign buyers on goods and services exported on credit terms. With this protection, Exporters are given the confidence to venture into emerging markets thereby expanding the export thrust.

Today, buyers overseas are demanding much longer credit terms and therefore failure to provide such credit would likely result in a curtailment of export sales. Such market dynamics are characteristic of the new ideology of “Free Trade” where borderless markets now form an important part of the financial landscape.

Increased volatility in the international marketplace however requires Exporters to constantly review their exposure to overseas buyers even those with whom they continue to enjoy a long and satisfactory trading relationship. With EXIMBANK’s Export Credit Insurance Policy, Exporters can obtain protection against Political and Commercial Risks (also called Comprehensive Risks).

COMMERCIAL RISKS:
• Insolvency of the overseas buyer (e.g. the buyer’s business company going into receivership)
• Deliberate default by the overseas buyer on goods already accepted.


POLITICAL RISKS:
 

•	Import controls in the buyer’s country
•	An outbreak of war involving the buyer’s country, civil war, or any other such political disturbance
•	Any such risks occurring outside this country and beyond the control of the exporter
•	Diversion of the shipment to another destination, resulting in non-delivery of goods within the contracted delivery time.

PREMIUMS:
These vary depending on the buyer’s credit worthiness, payment terms, the economic and political environment.