Export Credit Insurance Information

8/3/2019 Export Credit Insurance Information

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Export Credits

Export credit is providing pre-shipment and post-shipment credit either in Indian rupees or inforeign currency to an exporter. The credit is given for short term i.e. upto 6 months, medium/long term which extends more than 6 months according to the eligibility of the products and

projects. Usually medium/ long term export credit is given after inspecting the supplier's credits.

To promote the export promotion drive, the Government of India established Export CreditGuarantee Corporation of India Limited (ECGC) in 1957 to cover the risk of exporting on credit.This organisation offers a range of services to exporters. They are as mentioned below:

y It provides credit risk insurance covers to the exporters against there loss in export of goods and services.

y It offers guarantees to the banks and financial institutions in order to enable the exportersto obtain better facilities from them.

y It provides Overseas Investment Insurance to the Indian companies investing in joint

ventures abroad as equity of loan.Export Credit Insurance Export credit insurance protects the exporter from the consequences of the payment risks due tothe far-reaching political and economic changes. Outbreak of war or civil war might block or delay the payment for goods already exported. Coup or an insurrection in the importing countrymay also bring the same result. Export credit insurance is obtained from the ECGC with thefollowing issued covers:

y S tandard policies to protect the exporter against the risk of not receiving the paymentwhile trading with overseas buyers on short-term credit.

y S pecific policies which is designed to protect the exporter against the risk of notreceiving the payment in respect of:

o Exports on deferred payment termso S ervices rendered to the foreign partieso Construction work which also includes the turnkey projects undertaken abroad.

The policies are one of the following:

y W hole Turnover Policies in the form of 'Open Cover' in respect of shipments madeduring 24 months period DP, DA and open delivery terms. S hipment details has to bedeclared on monthly basis.

y S pecific policies for exports of capital goods on medium or long-term credit, turnkey projects, civil construction works and technical services.


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Procedures for export credit insurance:

y F irst, apply for insurance you need to fill in the "short-term export credit

insurance, comprehensive insurance application form" in triplicate, to the

export business name, address, scope of coverage, exports, insurance

coverage applicable to the buyer within the list and fill other needs that the

situation clear, the enterprise legal signature, the insurance company to

apply for export credit insurance coverage.

y S econd, the application limit of your insurance companies and the receipt

issued by the "short-term export credit insurance, all risks insurance policy",

you should exit the scope of this policy as soon as every one of our writtenapplication to the credit limit, and fill out the "short-term Export Credit

Risks Buyer Credit Limit Application F orm "in triplicate, according to the

requirements of the table, the buyer's situation, the bilateral trade conditions

and the limits of the company fill out the required clear-oriented enterprises

in the full range of appropriate security Overseas buyers old and new

applications for credit limit.y Third, export insurance company declared "short-term export credit

insurance buyer's credit limit approve comprehensive list" approved limit,

you each shipment, the fifteen days (or the 10th month ago) by batch, fill out

the "short-term export credit insurance export integrated declaration "(or"

short-term export credit insurance, comprehensive insurance export returns

and premiums on the book "), in triplicate, according to the requirements of

the table, the export situation truthfully completed clearly calculate and

collect premiums for the insurance company. F or you do not report within

the specified time of export, insurance companies require you to make a

report. However, if the report after the loss of export has occurred or is


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likely to cause loss event has occurred, the Company has the right to refuse

to accept the report after the event. If you have intentionally not reported or

serious omission or false positives, the company exports to the place you

have to declare the loss of the right to refuse to take responsibility.y F ourth, pay the insurance premiums you receive the insurance company's

"premium invoice" and the collection of documents within ten days from the

date you should pay the premiums. If not delivered within the prescribed

time limit premiums, the company declared for export to you, be liable; if

you have not delivered more than two months the prescribed time limit

premiums, the Company is entitled to terminate the policy, the premiumreceived not be refunded. The company declared a month and reported by

your thin out the rate schedule to calculate the premium payable. F or

adjustment of premium rates, the Company will notify you in writing, two

months after notice of exports of goods, insurance under the new rates.

y F ifth, reporting can damage your ship, the buyer has bankruptcy or

insolvency, the buyer reject the goods and payment has been made, the

buyer for three months past due are paid or unpaid, or happen at the end of

the Company under the political risk insurance event, within ten days the

insurance company should be reported in the "loss of short-term export

credit insurance may notice." To clearly brief the case and in the meantime

waiting for compensation, payment collection efforts, in close contact with

insurance companies, timely reporting of the collection or handling of the

process and results. S ix of the losses claimed, and you do not receive

payment claim is invalid, the compensation provisions of the insurance

waiting period expires, as soon as possible in the form of a written claim to

the insurance company and fill out the "short-term export credit insurance

claims application," while complete , to provide real "applications" out of


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the required documents (including trade contracts, bills of lading, export

declarations, invoices, packing lists, bills of exchange, buyers and sellers

Correspondence, "approval of a single credit limit", the export declaration

form and other information required by the Company). Because the buyer of your losses caused by insolvency claim, the insurance company confirmed

that bankruptcy or insolvency of the buyer as soon as Peifu; on claims for

losses due to other causes, the insurance company to wait for expiry of the

stipulated compensation, as soon as Peifu. The buyer for losses arising from

insolvency, if you are not in the buyer is declared bankrupt or insolvent

within one month after the claim, on the other causes of loss, not waiting for

the compensation claim after the expiry of two months, and is not justified,

the insurance company to reject your claim. Insurance company losses

within the insurance coverage, respectively, according to the policy schedule

listed in the commercial credit and political risk of wind damages caused by

the percentage of compensation. But the compensation shall not exceed the

credit limit approved by the Company or the insured buyer master of their

own credit limit is limited to the above percentages. VII informed the

insurance company to transfer your interest in the compensation notice, to be

issued, "the book claims receipt and transfer of interest" (in English

respectively) and in English, "Recovery of attorney." If the buyer paid or

unpaid loans overdue for three months, you reported that "notice of potential

loss," commissioned by the insurance company agreed to be recovered, the

case must provide a contract, bills of lading, invoices, correspondence andtrade between the two sides in English "Recovery of attorney." If you want

to learn more about short-term export credit insurance, or want to support

short-term export credit insurance, you can directly with the China Business

people contact can be with the Guangdong Provincial People's Insurance


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Company of China branch of international export credit insurance

department division contact You will be satisfied with the service. W e

sincerely welcome the export companies and enterprises to actively

participate in export credit insurance.

Export credit insurance - the seat belt export enterprises:

Export credit insurance export enterprises belt star S un W en _ the concept of

export credit insurance, export credit insurance (Export Credit Insurance), also

known as export credit insurance, for governments to improve the international

competitiveness of domestic products and promote their export trade, protect the

safety exchange earnings of exporters and banks, credit security, promoting

economic development, backed by the state finance for enterprises in the export

trade, foreign investment and foreign economic activities such as projectcontracting provides risk protection in a policy support measures are non-profit

insurance business, is the government's indirect control of a market economy

means and to add. W orld Trade Organization ( W TO) Agreement on S ubsidies and

Countervailing support in principle to allow the export of policy instruments. Its

responsibilities, the main export enterprises have not received payment after

delivery responsibilities, and sometimes expressed as breach of contract by the

buyer to make export enterprises exported goods can not be caused by loss; it

security risks, including the export of business services in the general commercial

insurance companies unwilling or unable to cover commercial credit risk or foreign

political risks. International export credit insurance industry began in the early 20th


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century, China's export credit insurance started in 1989. In the world today, 12% of

world trade is in support of export credit insurance to achieve, the highest 14%,

higher in some countries such as Japan is 39%, F rance 21%. As a policy of

insurance business, the nature of export credit insurance business and cash flowcharacteristics and general business insurance is very different. As international

competition intensifies, the requirement to provide 100% of the goods the buyer's

letter of credit guarantee funds by way of resistance to overseas buyers. In order to

expand exports, the Chinese mainland enterprises to use on credit (O / A), payment

(D / P), Documents against Acceptance (D / A), etc. deal with overseas buyers,

collection risk is significantly increased. S tatistics show that there is: Mainland

China enterprise fails to recover the amount of money has been growing year on

year increase of 40% per year to 50%. Meanwhile, only 0.1% of the non-foreign-

funded enterprises established credit risk management system. The types of export

credit insurance export credit insurance is divided into the following three: (a)

short-term export credit insurance (referred to as short-term insurance). Put off

short-term insurance cover within 180 days of the foreign exchange risks, mainly

used for payment (D / P), Documents against Acceptance (D / A), credit (O / A)

and other commercial credit payment terms of export. According to the actual

situation, short-term insurance can be extended to cover the credit terms of 180

days, 360 days of export, as well as a bank or other financial institutions under the

letter of credit issued by exports. (B) long-term export credit insurance (referred to

as the long-term risk), credit insurance can be divided into the buyer, the seller of

credit insurance and overseas investment insurance three categories. Put off long-term insurance cover of more than one year, generally not more than 10 years of

foreign exchange risks, mainly for large-scale electromechanical products and

complete sets of equipment exports, and foreign investment, such as the BOT,

BOO or form joint ventures set up abroad enterprises. (C) related to performance


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and export guarantee insurance (referred to as the guarantee insurance). Guarantee

insurance is divided into direct and indirect guarantee insurance guarantee

insurance. Guarantee insurance, including opening direct advance payment bond,

performance bond issued by insurance; indirect guarantee insurance, includingunderwriting unreasonable confiscation of the importer exporter bank guarantee.

The process for export credit insurance export credit insurance for the introduction

process, we must first understand a concept credit limit. Credit limit is the export

credit insurance company to the buyer (or the issuing bank) for credit assessment,

export credit insurance company on behalf of export enterprises exported to a

buyer (or a particular issuing bank under the letter of credit opened by the export of

) The maximum amount of liability. Large enterprise applications, such as the

credit limit given full approval of export credit insurance company, indicating that

the buyers credit is good; such as export credit insurance company has not been

fully approved, the company shipped the goods out of export credit insurance

company should be W ithin the line of credit limit approved arrangement is

appropriate; if approved limits export credit insurance company is zero, indicating

poor condition the buyer credit, export credit insurance company will not cover,

the proposed business carefully shipped. Therefore, the insurance, companies shall

be within the scope of protection to the appropriate export buyer (or the issuing

bank to open letters of credit under the export) for credit limits, which informed

buyers credit, master exchange earnings security. Now our business is relatively

more short-term export credit insurance, for example, a brief procedure for export

credit insurance. F irst, fill in the export business, "the application form" and the"Customer Information F orm"; export credit insurance company accepts coverage,

will insure a complete set of materials to make export enterprises, insurance

materials include: "Policy S chedule", "rate table" "Country Classification" and so

on. This stage enterprises should be noted that in completing the application form,


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the enterprise should be the policy terms and coverage of export credit insurance

company agreed to the amount of insurance coverage applicable to such matters, to

determine rates. W hen the issue of export credit insurance company "short-term

export credit insurance policies," will come to a complete insurance program. After handling insurance procedures, specific business operation process is divided into

three stages: 1, the limit for coverage of each insurance company providing

overseas buyers, "credit limit application form." Export credit insurance company

to investigate these buyers credit and credit assessment, credit limits approved

under the assessment of the situation, and "credit limit approval of a single" pay

insurance companies. There are three points to note: (A) the insurance companies

limit the buyer's credit investigation and approval takes time, so exporters initialed

the contract after the trade, they should immediately apply limits to not affect the

execution of the Contract. However, some exporters are often ready the goods, or

even to apply for quota loaded the boat, this time after the commencement of the

insured goods only to limit the losses suffered by the effective and limit the losses

before the commencement of the shipment is not in the insurance coverage. (B)

limit the size of the application according to the contract amount, contract

execution period, the batch and the loan recovery ship turnaround time required for

thorough consideration, the insurance company to fight for the maximum

protection limit. (C) limit the application form filled out to make it clear and

accurate. Best typing in English only. S cribbled handwriting is not easy to identify,

not only affects the accuracy of credit information, but also delay the approval time

limit. 2, shipping insurance business reporting the credit limit under the effectivedelivery to overseas buyers, all shipment of each consignment of export credit

insurance company to declare "export declaration", is recognized by the export

credit insurance company assumes the insurance for this ticket goods responsibility

before shipping. Basically the whole process by fax, express mail, e-mail and other


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forms to complete. 3, the claim was informed that the insurance companies or

potential losses under individual insurance, and timely reporting of "notice of

potential loss" of China for the ECIC. Political risk is often reported time of the

incident has occurred, the buyer and the bankruptcy or insolvency of the buyer toreject the goods and so within ten working days from the date of the purchase price

or the buyer within two months in arrears. Once the loss of identification,

insurance companies fill out the "Claim F orm" and provide trade contracts, bills of

lading, export declarations, invoices, packing lists, bills of exchange, buyers and

sellers Correspondence, "credit limit approved list", the export declaration form

and insurance company requirements and other relevant documents to apply for the

insurance company for compensation. How economical and effective to buy export

insurance W hile many exporters know that the export credit insurance, but because

the insurance premium for avoiding the issue. The current trading environment for

all Chinese exporters are very difficult giant. High cost of exports have never had

any profits, and then to increase some export credit insurance, more difficult to

make a profit. Therefore, most exporters would prefer to take risks, follow the past

practice, do not do export credit insurance. How can either buy that export credit

insurance, but also control the cost of the cost? F irst, before signing with foreign

investors, then we must treat it as a normal cost of the project into account.

S econd, the export credit insurance rates depend on country-owned risk category

buyer, payment on credit risk level and duration of the length of 3 factors,

exporters before and after the transaction should be carefully selected and

integrated control, the long-term and short-term Insurance combined. F inally, theinsurance company should be operating in good faith, while respecting the

insurance provisions, to fulfill obligations of the insured, or deliberately omitting

to prevent the situation reported, truthfully fill in the export declaration, scheduled

to pay insurance premiums, and actively cooperate with the insurance companies


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to do the risk prevention work, and export credit insurance companies can

negotiate and get the lowest premium rate. The dual role of export credit insurance

export credit insurance in addition to seat belts for International Development

Enterprises, but still an effective means of financing international trade. In theincreasingly serious problem of financing small and medium enterprises today, the

export credit insurance to reduce export risks, easing monetary policy tightening

export business loan hard. F or insured export credit insurance business, such as

participating in short-term export credit insurance, insurance (including

comprehensive insurance, credit insurance, the insurance system and the specific

buyer protection insurance) companies, according to "claim assignment

agreement" provides for compensation with the interests of transferred to the

lending banks to get from the bank the corresponding short-term trade financing

services. Trade financing export credit insurance include: letters of credit under the

Export Trade and export discount; payment D / P, against acceptance D / A and the

credit Negotiating under OA. Among them, the highest percentage of financing

under letters of credit up to the amount of Reimbursement 90%; D / P, D / A, OA

financing under the highest proportion of up to 80%. According to reports, the past

four years more than 1100 corporate finance bank billion yuan. This is more than

1100 million mainly driven by export credit insurance to the. Currently, nationwide

there are about more than twenty-funded, foreign banks can provide financing

under credit insurance. This can be done more than twenty banks, including Bank

of China, Agricultural Bank of China, China Construction Bank, Bank, Guangdong

Development Bank, DB S Bank, Nanyang Commercial Bank, S umitomo MitsuiBanking, S tandard Chartered Bank. Contrast the general financing products, export

credit insurance finance the benefits of export enterprises are: make an inventory

of accounts receivable; reduce financing threshold; relatively reasonable cost of

financing; really be increased with the financing business development and


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growth; breakthrough in fixed assets, limited its own funds and other constraints to

business development will bring. Export credit insurance is to promote Chinese

enterprises to go abroad and strong backing to address the financing needs of

export enterprises a powerful security, and foreign exchange earnings from theultimate bearers of risk. Although China's export credit insurance business there is

still a long cycle such as lack of insurance application, but to learn how to recover

the use of export credit insurance or financing of international payment, or the

majority of S MEs in China will help expand the overseas market in the road go

faster and more stable.

What is ECGC?

Export Credit Guarantee Corporation of India Limited, was

established in the year 1957 by the Government of India to

strengthen the export promotion drive by covering the risk o

exporting on credit.

Being essentially an export promotion organization, it functionsunder the administrative control of the Ministry of Commerce &

Industry, Department of Commerce, Government of India. It is

managed by a Board of Directors comprising representatives o

the Government, Reserve Bank of India, banking, insurance and

exporting community.

ECGC is the fifth largest credit insurer of the world in terms of coverage of national

exports. The present paid-up capital of the company is Rs.800 crores and authorized

capital Rs.1000 crores.

What does ECGC do?


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Provides a range of credit risk insurance covers to exporters against loss in

export of goods and services

Offers guarantees to banks and financial institutions to enable exporters to

obtain better facilities from them

Provides Overseas Investment Insurance to Indian companies investing in

joint ventures abroad in the form of equity or loan

H ow does ECGC help exporters?ECGC

Offers insurance protection to exporters against payment risks

Provides guidance in export-related activities

Makes available information on different countries with its own credit ratings

Makes it easy to obtain export finance from banks/financial institutions

Assists exporters in recovering bad debts

Provides information on credit-worthiness of overseas buyers

N eed for export credit insurancePayments for exports are open to risks even at the best of times. The risks have

assumed large proportions today due to the far-reaching political and economic

changes that are sweeping the world. An outbreak of war or civil war may block or

delay payment for goods exported. A coup or an insurrection may also bring about

the same result. Economic difficulties or balance of payment problems may lead a

country to impose restrictions on either import of certain goods or on transfer o

payments for goods imported. In addition, the exporters have to face commercial

risks of insolvency or protracted default of buyers. The commercial risks of a

foreign buyer going bankrupt or losing his capacity to pay are aggravated due to the

political and economic uncertainties. Export credit insurance is designed to protect


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exporters from the consequences of the payment risks, both political and

commercial, and to enable them to expand their overseas business without fear o

loss .

Acquire Export Credit InsurancExport credit insurance protects you from the consequences of the payment risks, both political and comexpand your overseas business without fear of loss. Further, it creates a favorable climate for you underget timely and liberal credit facilities from the banks at home.

You can obtain Export Credit Insurance from the Export Credit and Guarantee Corporation of India Limiteyou Export Credit Insurance, the following covers are issued by the ECGC :

y S tandard policies to protect you against the risk of not 7 3 receiving payment while trading wit short-term credit.

y Specific policies designed to protect you against the risk of not receiving payment in respect of: o exports on deferred payment terms o services rendered to foreign parties o construction work, including turnkey projects undertaken abroad

The policies are either: W hole Turnover Policies in the form of 'Open Cover' in respect of shipments mad

period. You have to obtain credit limit on each one of your buyers to enable ECGthe basis of credit worthiness of the buyer. These policies are basically similar tobut only apply to specific contracts.

S pecific Policies for exports of capital goods on medium or long-term credit, turnconstruction works and technical services. These policies are basically similar tobut only apply to specific contracts.

y Financial guarantees issued to banks against risk involved in providing credit or guarantee facilitiy Special schemes viz. transfer guarantee issued to protect banks which add confirmation to letters

cover for Buyers' Credit, Lines of Credit, Joint Ventures and Overseas Investment Insurance, andRisk Insurance. The other guarantees which banks can offer to you through ECGC schemes are :-Payments Guarantee,--- Bank guarantee for due performance of the contract by the exporter,---Bpayment of retention money,--- Bank guarantee for loans in foreign currencies. Details of these sfrom your own banker or local office of the Export Credit and Guarantee Corporation of India Ltd.

TheS hipments (Comprehensive Risks) Policy is the one ideally suited to cover risks in respect of goods ecredit.Shipments to associates or to agents and those against letter of credit can be covered for only poliendorsements to the shipments (comprehensive risks) Policy. Premium is charged on such shipments at l

For obtaining a policy you should apply to the nearest office of the ECGC in the prescribed Form no.121 (along with the following documents :

(i) Bank Certificate about the financial position

(ii) Application form for fixing the credit limit


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EXPORT PROCEDURE S :

y H ow To Export y P reliminaries for Starting Export y R egistration y R egister with Export P romotion Council y D ispatching Samples y Appointing Agents y Specimen Copy of Agreement y Acquire an Export License y Acquire Export Credit Insurancey Arranging Finance y R ates of Interest y U nderstand Foreign Exchange R ates & P rotect Against Their Adverse

Movement y Forward Contracts y P rocuring/Manufacturing Goods for Export & Their Inspection by

Government Authorities y Labeling, P ackaging, P acking & Marking Goods y N ew Excise P rocedure

(iii) Name/address of foreign buyer fixing sub-limits

After examining the proposal, ECGC would send the exporter an offer letter stating the terms of its coverpolicy will be issued after the exporter conveys his consent to the premium rate and pays a non-refundablfor policies with maximum liability limit 7 3 upto Rs. 5 lakhs; Rs. 200 between Rs. 5 lakhs and Rs. 20each additional Rs. 10 lakhs or part thereof subject to a ceiling of Rs. 2500.As commercial risks are not coa credit limit, you are advised to apply to ECGC for approval of credit limit on buyer in the prescribed Fofrom ECGC) before making shipment. Credit limit is the limit upto which claim can be paid under the polcommercial risks. If no application for credit limit on a buyer has been made, ECGC accepts liability for cmaximum of Rs. 5,00,000 for D.P./C.A.D. transactions and Rs. 2,00,000 for D.A. transactions provided thashipments have been effected to the buyer during the preceding two years on similar terms, at least onethan the discretionary limit availed of by the exporter and the buyer had made payment on the due dates.


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Export Credit Insurance

The Export-Import Bank of Trinidad and Tobago Limited (EXIMBANK) offers export creditinsurance to exporters. This insurance offers risk protection against payment default by foreignbuyers of goods and services exported on credit terms. Export credit insurance allows exporters

to venture into new export markets.

y Who can apply for export credit insurance? y What is the application process? y What happens after an application is submitted? y What does it cost? y Where can I find more information?

y Forms and Other Downloadsy Related Servicesy Quick Links

Who can apply for export credit insurance?

Small, medium and large enterprises operating within Trinidad or Tobago that would like to beginexporting or would like to increase their export market are eligible to apply for export creditinsurance.

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What is the application process?

EXIMBANK's Business Development Officers are ready to visit your business to provide you withan application package. Application packages can also be picked up from EXIMBANK's office ordownloaded from EXIMBANK's website using the link at the end of this section. Completedapplications can be mailed, faxed or scanned and e-mailed to EXIMBANK.

The following supporting documentation should be submitted with the completed applicationform:

y One copy of a valid proof of identification for each company director (national identification

card, driver's permit, Trinidad and Tobago passport, or foreign passport).y Company registration papers (Certificate of Registration, Return of Director, and Return of

Registered Address).y Audited financial statements for the last three to four years of operation (for an existing

business) or an opening Balance Sheet and Projected Cash Flows (for a new enterprise).y Completed EXIMBANK forms for each customer/buyer.

The application package should be completed in accordance with the included instructions and


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returned, with all supporting documentation, to EXIMBANK.

Export-Import Bank of Trinidad and Tobago Limited (EXIMBANK)

EXIM House

30 Queen's Park West

Port of SpainTrinidad, West Indies

Tel. (868) 628-2762 or (868) 628-1382Fax. (868) 628-9370E-mail. [email protected] Opening hours: 8:00 am to 4:00 pm, Monday to Friday, except public holidays

Export Credit Insurance application form

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What happens after an application is submitted?

An EXIMBANK representative will review the application and request omitted or additionalinformation, if necessary. EXIMBANK will then identify insurance policy options that meet theapplicant's needs and come to an agreement with the client on the best option. The client willthen complete both the Proposal for Comprehensive Risk Policy and Application for Credit Limit forms and pay the policy set-up fee listed below.

The timeframe for processing an application can vary from two working days to two weeks,depending on a number of variables including the number of approving authorities and theavailability of documentary requirements such as financial statements.

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What does it cost?

There is a TT$500.00 fee to establish the insurance policy. This fee is subject to change withoutnotice.

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Where can I find more information?

For further information please contact EXIMBANK at the address below or visit our website.


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Export-Import Bank of Trinidad and Tobago Limited (EXIMBANK)

EXIM House

30 Queen's Park West

Port of SpainTrinidad, West Indies

Tel. (868) 628-2762 or (868) 628-1382Fax. (868) 628-9370E-mail. eximbank@

Ex-Im Bank Medium-Term Export Credit Insurance

S ummaryExporters and F inancial Institutions supporting the sale of U. S . capital equipment,

its installation and a

complement of spare parts if necessary, can insure their foreign receivables against

losses with Ex-Im

Bank medium-term policies.

Ex-Im Bank medium-term policies protect U. S . sales to a single foreign buyer

against the buyer's failure to

pay an obligation because of unforeseen commercial or political reasons. The

policies can often help U. S .

exporters obtain financing and, therefore, compete in selling overseas through the

use of prudent credit

extension practices. Also see Ex-Im Bank's F act S heet on the Medium Term Bank-

to-Bank Credit Line Export Credit Insurance Policy, form

EIB99-10.

There is no requirement to insure all sales under the medium-term policies since

each policy covers transactions with one particular buyer for single


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or repetitive sales.

Policy F ormat

Policies will be issued in one of two formats:

A "Documentary" policy will be issued to financial institutions wherein the insured bank will be required to obtain specific documents

(signed buyer obligation, transport documents, invoice and Exporter Certificate,

form EIB94-07) which evidence conformity with the policy

requirements. If the beneficiary of the funding is other than the exporter, a

Beneficiary Certificate, form EIB92-37, is required as well. The

insured financial institution is protected against fraud, disputes and other defects o

the underlying transaction. The documentary policy is

available for both single sale and buyer specific repetitive sales transactions.

1.

A "Non-Documentary" policy will be issued to exporters. This policy is assignable

to financial institutions and a documentary assignment

will be made available to provide the same protection to the assignee financial

institution as the documentary policy. The non-documentary

policy will be available to accommodate both single sale and repetitive sales

transactions.

2.

Both formats require the use of an Ex-Im Bank Promissory Note form or a different

note form that meets certain criteria. Ex-Im Bank has special

promissory notes for Mexico, form EIB92-59, and Venezuela, form EIB97-9, aswell as standard notes, form EIB92-58.

W hat Is Covered

The maximum cover available under medium-term policies is $10 million. All cover

is subject to Ex-Im Bank foreign content guidelines. Ex-Im Bank's


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medium-term policies cover:

Commercial losses resulting from nonpayment for such reasons as a buyer's

insolvency or failure to pay an obligation within 30 days of

the due date.1.

2. Political losses.

Ex-Im Bank indemnifies an insured for 100 percent of the financed portion in the

event of a commercial loss or political loss.

Ex-Im Bank's medium-term policies cover credit sales in which payment terms

range between one and five years (exceptionally 7 years) after the

goods arrive at the port of importation. Policies are available to accommodate two

types of transactions:

1. single sales - one-time transactions; and

2. repetitive sales - ongoing relationships, generally between an exporter and a

dealer or distributor.

All of the medium-term policies require that the insured obtain a cash down

payment from the buyer in an amount equal to at least 15 percent of the

contract price prior to delivery. The remaining financed portion is then insured at

100 percent. The buyer's obligation to pay the financed portion

must be evidenced by a promissory note. The financed portion must be payable in at

least semiannual equal installments of principal and interest.

APPLICATION PROCEDURE

The applicant submits an application, form EIB03-02 . If the application is approved,Ex-Im Bank issues a policy stating the coverage parameters.

Those parameters include Ex-Im Bank's limit of liability, the amount of the contract

price, the down payment and the financed portion, the payment

terms, the premium amount, the final shipment date, and any special conditions


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required.

F ollowing shipments or funding, the insured submits a report of premiums payable

form, EIB92-29 for exporters, EIB92-30 for financial institutions,

stating shipments made during the month and accompanied by the appropriate premium check.

ELIGIBLE REPAYMENT TERM S

The length of payment terms available under Ex-Im Bank medium-term policies

depends on the total value of sales and, to some extent, upon the

Ex-Im Bank :: Products & Policies :: Insurance

http://www.exim.gov/products/insurance/medium_term.cfm

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unit value of capital goods. The following table shows the maximum terms for

specified dollar amounts:

Contract Price of Transaction Maximum Payment Term

less than $80,000 two years

$80,000 - less than $175,000 three years

$175,000 - less than $350,000 four years

$350,000 or more five years

S ales to dealers or others for resale are limited to maximum credit terms of two

years.

PREMIUM RATE S AND PAYMENT

All policies require premium payment by the last business day of the month

immediately following each insured shipment or funding for financialinstitutions. Premium is calculated on the financed portion of the medium-term

shipments made during the period.

Applicants may obtain a non-binding rate indication by referring to the Exposure

F ee Calculator at Ex-Im Bank's Internet Homepage or by contacting


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the Business Development Division with specifics of the contemplated transaction.

Changing conditions may result in a different rate being finally

offered than is initially indicated. However, premiums specified by Ex-Im Bank in

writing are firm.INTERE S T COVERAGE

The interest rate insured on medium-term transactions is 100 percent of the rate

provided in the note. To be covered, post-maturity interest must be

stipulated by the insured in the promissory note. Post maturity interest is covered at

the original note rate. Coverage of interest charges may extend

to the date of claim payment, or 270 days, whichever is earlier.

OVERDUE S AND CLAIM S

Insureds must report all buyers which fall into default within 60 days of the default

and on a monthly basis, form EIB92-28. In all cases, these

monthly reports of overdues situations should continue for as long as the overdues

exists, or until a claim is submitted.

W hen claims are submitted, copies of all documents pertaining to the transactions,

such as invoices, bills of lading, promissory notes and

guarantees, must be forwarded in conjunction with the proof of loss form, EIB92-

26, for review.

There is a 30-day waiting period after the date of default before a claim can be filed.

The latest date for filing any type of claim is 150 days after the

date of default.

INF ORMATION REQUIRED F ROM APPLICANT S Applicant information. A completed application, form EIB03-02 , is required. If the

applicant is other than the exporter or suppler, such as a

financial institution, then information on the exporter and supplier is required.

Buyer information - The applicant must also provide information about the buyer


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and guarantor, if any. In general, the following guidelines apply:

a credit report from an agency, dated not more than 6 months from the application

date;

a commercial bank checking, dated not more than 6 months from the applicationdate; and

three years of financial statements and an interim statement if the latest fiscal year

end statement is dated more than 9 months from the

application date.

Audited financial statements are preferred and generally will be required when Ex-

Im Bank's total potential exposure exceeds $1 million. If unaudited

statements are provided, they must be signed and accompanied by a summary o

significant accounting practices used in their preparation.

Ex-Im Bank has published its Medium Term Credit S tandards , EBD-M-39, for

Buyers that may be consulted to determine the information necessary

and the likelihood of approval.

More Information

Headquarters

U.S . Toll F ree Number

W orldwide Number

Trade F inance and Insurance

Internet

(800) 565.3946 (EXIM)

(202) 565.3946Refer to Contact Us for counsel

http://www.exim.gov

This is not a solicitation by the Export-Import Bank of the United S tates or its

employees. It is a descriptive summary only. The complete terms and


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conditions of the policy are set forth in the policy, applications and endorsements.

CREDIT IN S URANCE GRUDGE PURCHA S E OR E SS ENTIAL CREDIT

MANAGEMENT TOOL?

QUE S TION S & AN SW ER S

Introduction

In business, there is only one thing that is really important: getting paid. The only

good client so the

phrase has it is a paying client.

There are, however, a whole host of reasons for non-payment, some simple, some

more complex. W hatever

the reasons, and wherever the fault lies, however, a bad debt could place your

business in serious jeopardy.

The business world as we know is littered with incidences of spectacular bad debts

bringing companies to

their knees.

Consider a Balance S heet. W hilst most firms insure their physical assets (buildings,

stock, contents), future

income by way of business interruption insurance, and purchase liability insurance

to protect against third party claims, far fewer consider protecting their debtors balance, often a significant

asset,

A simple insurance policy can make all the difference. This is where Credit

Insurance comes in.


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W hat is credit insurance?

Credit insurance provides your business with protection against the failure of your

customer to pay their trade

credit debts i.e. money that is rightfully yours. S uch a debt can arise as a result oyour customer becoming

insolvent (i.e. going bust) or because your customer simply fails to pay within an

agreed credit period.

The protection covers as standard goods sold and delivered but can be tailored to

cover many other risks

such as pre-despatch work-in-progress and binding contracts.

As well as commercial risk, credit insurance can also protect against political

risk for those trading abroad.

Examples include war or civil war, cancellation of the contract by the government

of your customers country,

or governmental regulations which prevent the export or import of goods.

Credit insurance can indemnify you against a complete spectrum of perils such as

inconvertibility, contract

frustration, contract cancellation, and export and import restriction problems.

W ho uses credit insurance?

The sensible ones! Credit insurance is suited to all manner of companies, regardless

of whether they are

trading nationally or internationally, and in all sectors from manufacturing to

services. In terms of size theytend to be firms with turnovers from 250,000 through to the turnovers of the

largest multinationals.

W hen and why would you consider using credit insurance?

On average, companies are estimated to have 40% of their current assets in the form


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of trade debtors. ( F or

some companies this figure can be much higher). Research has shown consistently

that companies are

unable to predict the vast majority of failures to which they are exposed.Indeed it is estimated that up to 50% of all failures concern customers that were

previously considered to be

both long standing and prompt paying. It is a sobering thought that even the

customer you thought you

knew best of all could inadvertently end up being your downfall.

The cost of bad debt can be very significant. F or example, if a company is operating

on a 5% profit margin, a

10,000 bad debt would require 200,000 of additional sales to compensate for the

lost ground. Double the debt and it is easy to see why businesses can be brought to

the brink of collapse. U


26/27

S mall Business with New 'Export' S ales OrdersCase S tudy 1Case S tudy 2Case

S tudy 3Case S tudy 4

Requires Competitive Payment Terms to W in Export Orders

Enterprise- U. S . Manufacturer of Outdoor Advertising S tructures

Background : 16-year old closely held company is experiencing new sales inquiries

and orders from international companies. F oreign buyers require payment terms

beyond those normally offered by the exporter. Normal payment terms are 90 days

from date of shipment. F oreign buyers desire payment terms of up to 360 days from

date of shipment. The exporter's current lender will not include international A/R in

borrowing base unless adequately insured by Export Credit Insurance. Product

content is 100% U. S .

F inancial F acts : Annual S ales - $19 million (1% international, which would grow

to 20% with pending international orders). Current export orders in hand: $4 million

to Mexican buyers. Company is deemed 'small' by S BA S ize S tandards, average

annual export 'credit' sales over the past two years have not exceeded $5 million,

they have had an Operating History of more than 1 year and they have a positive

Net W orth.

Objective : F oreign buyers needed longer-than-normal payment terms on open

account to allow time to install equipment and receive payment from their clients

(in essence financing their purchase without expensive local bank financing). In thiscase, foreign buyers require up to 360 days, which the Company could not

ordinarily provide without enhancing the quality of the Account Receivable

assuring that they would 'get paid' in full and on time. Export Credit Insurance

raises the quality of these Export Accounts Receivables, allowing the exporter's


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bank to include the Export A/R in their borrowing base and receive funding to

complete these export orders and carry the A/R for 1 year.

S olution : W orld Trade Consult, LLC structured a S mall Business S hort Term

MultiBuyer Export Credit Insurance Policy issued by The Export-Import Bank othe United S tates, the official export credit agency of the United S tates. This

insurance protection plan provides Named Buyer coverage on each new

international customer, covering sales terms up to 360 days from date of shipment.

In the event of a foreign 'commercial' risk loss (buyer's insolvency, bankruptcy,

protracted default in payment), the company would receive 95% of the gross

invoice value. In the event of a foreign 'political' risk loss (war, insurrection,

cancellation of import licenses, etc), the company would receive 100% of the gross

invoice value. The insured exporter pays premium monthly covering only those

export sales/shipments insured, with NO MINIMUM ANNUAL PREMIUM

REQUIRED W ITH I SS UANCE O F POLICY (conserving scarce cash resources).

Outcome : Policy was issued and assigned to exporter's lender who included the $4

million International A/R in borrowing base, providing up to $3.6 million (90%) in

working capital funding to complete these export orders. In addition, the exporter's

insurance premium of 1.55% for the export sales insurance covering 360 day open

account payment terms was much lower, thus more competitive than local Mexican

bank financing. W ith NO F irst Loss Deductible and only a small 5% co-pay in the

event of a 'foreign commercial' loss, the insurance coverage was the fullest in the

market for small businesses

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