The Definition Of Export Credit Insurance
Credit insurance export or Export Credit Insurance is a type of insurance that provides compensation to exporters against the risk of loss due to the possibility of not receiving payment from the importer or bank opening Letter of Credit (LC) that caused by the risk of Commercial and/or Political Risks.
- Importers of bankruptcy (bankrupt)
- The importer does not pay (missed appointments)
- Importers refused to accept the goods
- A ban on the transfer of
- Import quota restrictions
- Revocation of the import business
- War or act of hostility
Export Credit Insurance Benefits For Exporters
- Gives a feeling of safety to exporters in the face of the risk of its export, as well as increasing the boldness to penetrate new export markets with the cost of premiums is very light;
- The exporter can offer or fulfilling a desire to importers to use the method of payment (terms of payment) with a soft payment terms (non LC) but relatively risk-level default (payment default) higher as Documents Against Acceptance (D/A), Documents Against Payment (D/P) and an Open Account (O/A);
- Exporters can meet market demand stemming from the importer particularly in non-traditional markets;
- Exporters can use the export credit Insurance in order to obtain financing of discount wesel export (post-shipment export financing) where export credit Insurance is an additional guarantee to the bank.
Benefits Of Export Credit Insurance For The Bank
- Eases banking provides financing exports post shipment (post shipment export-financing) through the export Bill of discount/wesel export owned exporters;
- The Bank acquiring a pelimpahan right of redress (SPHGR) from exporters will benefit in the form of the presence of added value against the export of discount in wesel by the bank, which had insured the risk of payment from the importer by the company insurance.
The Amount Of Compensation
Insurance companies will pay compensation to a maximum of 85% of the losses.
Basic Calculation Of Premiums
The magnitude of the premium is calculated based on the risks associated with:
- Class Payment home country (country risk);
- The payment method that was used (LC or Non-LC);
- A period of credit granting (Tenor, maximum 180 days);
Ways Of Payment
Insurance companies can close the coverage over the export transactions to use the Terms of a guaranteed Payment LC (Sight and Usance LC LC) or are not guaranteed such Documents Against Acceptance LC (D/A), Documents Against Payment (D/P) and Open Account (O/A).
Recovery Of Losses
With give indemnity from the insurer to the exporter, the importer did not remove the obligation of payment against the exporter.
Each payment importer is divided proportionally between insurers and exporters in accordance with the magnitude of the damages portion of the insurance company.
Our best partners in publishing export credit Insurance is Insurance Asei Indonesia.