Export credit insurance

Export credit insurance


Insurance export kreditovStrahovanie export credits (born. Export credit insurance) - insurance products exporter from the risk of default on the part of the importer.

The purpose of export credit insurance - protection of the exporter at the time when he was in the process of selling products (services) under the terms of deferred payment (credit) is the holder of the right to credit and subject to the risks of non-payment.

The manufacturer-exporter can sell products or on advance payment or loan. Both of these features have benefits and risks. Upon the sale of pre-paid accelerated financial cycle, but sharply reduced competitiveness. When selling on credit (deferred payment) increased competitiveness, but slows down the financial cycle and to this is added the risk of financial insolvency of buyers and importers.

To avoid the risk of insolvency and to resist the high costs associated with the increase in the financial cycle, exporters use export credit insurance. In this case, the insurer assumes the responsibility to evaluate the importer (debtor), that is, to determine the degree of confidence in him, to perform all necessary operations for reimbursement of the loan and to carry insurance payments to the exporter (creditor) on insured loans in the event of an insured event.

Export credit insurance guarantees coverage of the final risk of total or partial loss of the loan amount due to the insolvency of the debtor (importer) in the manner and within the period specified in the policy.

In this case, the owners of loans (exporters) must distribute insurance coverage for all of its customers (importers) (Principles of the Global). Only strict adherence to this principle would allow the insurer to achieve a balance in the insurance contract and to avoid a situation in which the insurer will not cover the risk of importing believed to be reliable. Insurance coverage guarantee is based on the assignment of the degree of confidence to each importer on the basis of the maximum limit of insurance payments on his contract.

The policyholder should have data on the degree of trust on all importers, which it has issued or will issue a credit. In assessing the degree of confidence comes from the insurer to the importer of indicators that characterize its financial and economic situation and trade flows. The insurer reserves the right to reduce or cancel any degree of confidence, notifying the insurer.

Insurance coverage may not be a 100% because the policyholder is also involved in the risk of loss for loss of profits, additional costs of providing legal protection, etc. The validity of the credit for this type of insurance shall not exceed 24 months. In the case of non-payment loan insured damage occurs in one of the following cases: default de jure (formal bankruptcy) and de facto default (contretemps financial position).

In any case, after 180 days from the end date of the loan is deemed to be an extension of the non-payment of insurance payments. Insurance companies offer insurance policies of export credits through its own network, based on an agreement by the association of industrialists or through banks.

The banks are also willing to provide financing to exporters under insured loans on more favorable terms, as in this case, they are entitled to participate in insurance contracts. Selling insurance policies through banks going through closer involvement of banks in this process in various forms.

Characterized by the following trend: the bank acquires a special policy (policy counterparty), which then take part in all the bank's customers by executing additional policies by the bank itself.

Export credit insurance is carried out by a limited number of insurers, especially those who use investment insurance.











Insurance risk of default (Eng. Non-payment insurance) - one of the varieties of credit insurance.

Under the contract of insurance against the risk of non-payment the insurer undertakes to pay the insurance indemnity to the insured in case of no return granted them their counterparty credit or part of unspecified reasons.

The object of insurance against the risk of default is the property interests of suppliers of goods or services related to the possible failure to pay the debt due to the debtor's insolvency, or as otherwise agreed in the contract of insurance reasons. Depending on the nature of insurance risk insurance risk of default is divided into insurance against political and commercial factors on.

Carrying insurance risk of default is based on the following principles. Insurance shall be limited to operations involving the supply of goods, the implementation of leasing operations, etc .; not insured purely financial transactions; an insurance contract is a creditor; Finally, the insurance contract shall be preceded by the appearance of specific risk, that is the conclusion of the contract of sale, or at least sending to the recipient; the insurer may include in the contract a condition that part of the cost of the delivered goods has been paid at the time of delivery or in advance.

Terms of the contract may be to engage them all operations of the insured or all of its operations with any client without limitations. However, when the supply of the means of production of high-value, can be separate contracts credit insurance provided for the payment of such orders. It is the responsibility of the insurer applies only to strictly specified risks related mainly to unforeseen circumstances.

Of liability insurance is usually excluded cases of non-payment or delay in payment if they were caused by reasons such as:


implementation of the supply or provision of services in violation of the terms of the contract (due to the deviation from the terms of shortage of goods, deterioration of the goods specified requirements, etc.);
mismatch legislation conditions of the contract of sale or provision of services;
lack of necessary documents (invoices, shipping documents and licenses etc.).
refusal by the buyer of goods or refund. Insurance accepted loans that exceed the agreed contract sum insured.


Loans for less money remains the responsibility of the insured. Part of potential losses when the insured event is the responsibility of the insurer, which is achieved by establishing an unconditional franchise component is usually 20-30% damage. In this case, the insurer, as a rule, it is prohibited to insure the uncovered part of the damage in other insurance institutions.

Insurance liability arises from the moment when deliveries are made, the buyer and accepted by them billed. But credit insurance provided for the supply of the means of production, the term of the contract start date can be the agreement to supply. This increases the degree of insurance risk because the buyer may become insolvent during the manufacturing equipment.

Insurance reimbursement made mostly only in the final loss of credit in connection with the bankruptcy of the debtor, or the termination of its activities officially established inability to pay their debt. Terms of contracts of insurance risk of default may be limitations Max, repayment period (in this case the short is generally considered debt not exceeding 6 months, and the medium - debt with a maturity of up to 5 years). A significant part of the loss is prevented by using this control to lend. Insurers are extensive databases of the creditworthiness of borrowers, the analysis of which allows to solve the problem of the availability of insurance coverage and the extent of such protection.

Premiums can short-term receivables is calculated and paid monthly based on the amount of outstanding debt on average per month or at the end of the month or monthly turnover operations. Medium risk insurance receivables from transactions with the means of production insurance premium is usually calculated based on the original insured loan amount and the time of his maturity.

Sum insured is established for each transaction or each buyer (customer) in the value delivered but not paid previously or at the time of delivery of the goods. The insurer has the ability to specify the maximum amount of debt the individual customer to the supplier, which can occur at any time during the term of the contract of insurance risk of default. In addition, the agreement sets the maximum liability of the insurer for each year for all insured loans.

Insurance compensation is made only after the final determination of the extent of damage. To this end, the insurer must identify the reasons for non-payment, to take remedial action, to recover from the defaulter as much of the debt as well as to sell the property or goods that serve as collateral for the loan.

This often allows you to significantly reduce the size of losses, ability to act as an insurer increases the likelihood of transfer of ownership of the goods to the unpaid creditors. Then proceeds goes to collect a debt to the insurer. Amount of loss incurred, defined as the difference between the insured amount and the proceeds from the debtor, including revenues from the sale of collateral.

As for such operations requires quite a long time, the terms of the insurance contract provides for the risk of default waiting period for reimbursement by the insured by the insurer: the insurer's obligation to pay damages does not occur immediately after the agreement on the trade or service contract is not made payment, and after a specified period of time which is usually from 60 to 180 days.