Procedures for export credit insurance

Procedures of Export Credit Insurance

Export credit insurance is a type of insurance policy provided by the government or a private insurer that protects a business or exporter against losses that may occur due to a customer or buyer defaulting on their payment obligations. The government-won export credit insurance policies provide greater and long-term coverage than private insurance policies, but they often require extra paperwork and conditions to be met. Generally, the steps invovled in obtaining export credit insurance are:

1. Apply for Eligibility:

The first step in applying for export credit insurance is determining whether your company is eligible for coverage. The export credit department of the insurer will assess and validate your companys eligibility based on various factors such as financial strength, credit history, export experience, ability to meet certain export requirements, and other criteria.

2. Provide Required Documentation:

After determining your companys eligibility, the insurer will ask you to provide all the necessary documents required to complete your application. These documents may include the business financial statements, balance sheets, proof of export experience, banking records, and other such documents.

3. Compile Export Submission Packages:

The insurer will also require you to compile all the documents related to the export transaction, including commercial invoices, shipment dates, documents of origin, cargo insurance, etc. All these documents need to be compiled and submitted in a single package.

4. Receive Application Review and Coverage Quote:

Once the application and export submission packages have been submitted, the insurer will review them, and if successful, will provide a coverage quote. The quote will provide details about the type of coverage, premiums, and discounts available.

5. Apply for Coverage:

Once the coverage quote has been reviewed and approved, the applicant can then apply for coverage. During the application process, the applicant will also have to fill out a risk assessment form that will provide details about the extent of the coverage and the potential risks associated with the export transaction.

6. Pay the Premiums:

The last step in applying for export credit insurance is to pay the required premiums. The premiums can be paid in one lump sum or over a period of time. Once the premiums have been paid, the coverage will be in effect and the applicant can be assured of protection against potential losses due to default or non-payment by buyers.

Conclusion

Export credit insurance provides important protection to businesses or exporters who engage in international trade. By obtaining export credit insurance, businesses can reduce the risk of potential losses due to buyer defaults and be in a better position to secure export contracts. Following the above-mentioned steps will help ensure a smooth application process for export credit insurance and help secure peace of mind.

The procedure for handling export credit insurance is as follows:

First, customers should approach the exporters bank, and the bank will start to arrange the insurance for exports. The customer then should provide information about the type of goods, quantity, destination and their requirements to the bank.

Second, the bank should contact the credit insurance company to check the credit status of the customers buyer in the destination country, and obtain the terms of credit insurance.

Third, once all required documents are ready, the customer will be asked to sign the credit insurance contract. At this point, the bank will collect the premiums, and the customer will be asked to make or authorize a payment to the bank and the credit insurance company.

Fourth, the bank will transfer documents to the insurance company and the customer. Then, the customer should submit documents to their buyer, including the credit insurance coverage information, so that their buyer can get the goods according to the terms of the contract.

Fifth, the customer then should collect payment from the buyer and forward the proof of payment and other documents to both the bank and the credit insurance company for verification.

Sixth, once the buyer pays the bill, the customer will be paid the goods plus interest by the insurance company, minus any premium or claim cost.

Lastly, the customer should submit the required documents to the bank and the credit insurance company for record keeping. Upon completion of all necessary procedures, the customers transaction can be considered to have been successfully handled by the credit insurance company.