1. PROMOTING TRADE AND INVESTMENTS WITH BRICS COUNTRIES
Welcome to
the presentation on
Role of ECGC IN
PROMOTING TRADE AND INVESTMENTS WITH BRICS COUNTRIES

2. RISK!!

3. SAYING
“Anything is possible”, said an intellectual, and “my experience is that the contingencies not provided for are those which happen”

4. CREDIT IS THE KEY TO BUSINESS GROWTH & PROSPERITY
To fill the gap between need and availability of money
To maximize utilisation of resources
One credit generates series of credits & multiplicity of activities
Attention on credit worthiness results in better business management
Used as effective marketing tool

5. Risks in Export Transactions
Political instability and civil disturbances in a number of countries such as Afghanistan, breakup of the erstwhile Soviet Union,Syria, Libya continuing events in Africa and South America
Transfer delay problems due to scarcity of foreign exchange as in Nigeria, Argentina, Mozambique.
Collapse of banks such as in Russia after shift towards market economy
Collapse of banks like Meryll Lynch,Lehman Bros., and Insurance companies like AIG … NOW!!

6. More than one Company Fails Every day!
Analysis of data by an Int’l Agency shows that in Advanced Economies EVERY DAY MORE THAN one ….
New business is formed
Company changes its name
Directorship changes
Share ownership changes
Company changes control
AND
More than one Company Fails Every day!

7. General Trade Concepts
Know your customer!
Know their country!
Know their “credit” bank!
Understand the trade cycle!
Understand Terminology!
Understand Transaction Risks!
Understand Ground Rules!

8. RISK MANAGEMENT
Definition:-
Risk Management Can be defined as identification, analysis and economic control of risks that threaten the assets or earning capacity of the enterprises.

9. RISK MANAGEMENT STRATEGY FOR RISK MANAGEMENT. RISK IDENTIFICATION
RISK ANALYSIS
RISK ASSESSMENT
RISK REDUCTION

10. GLOBAL TRADE RISKS Type of Risk How to Mitigate
Transit Risk Marine Insurance
Exchange Risk Authorised Dealer
Credit Risk Various Options

11. Types of Export Credit Risks

12. Export Credit Insurance (ECI)
Is a cover offered by insurance companies which encompasses the risk of non-payment in export operations
Usual risks covered are commercial risks and political risks
The commercial risk rests with the buyer; political risk with the country
Commercial risks covered include insolvency, default or repudiation.
Political risks covered include war/ civil war/ revolutions, imposition of import restrictions, exchange transfer delay/ embargo, diversion of voyage risk.

13. Need for ECI
Imperfect information in banks, trading companies & exporter firms on overseas buyers and their economies
Increasing competition has led to the seller’s market giving place to buyer’s market, creating demand for goods being sold on credit terms necessitating protection against bad debts
When buyer and seller are in different countries, then apart from the risk on the buyer, other risks are created by the eco-politico and financial situation in the buyer’s country
Protection for such export credit risks world over can be provided by ECI schemes

14. Benefits of ECI Reduces the risk involved in export transactions.
Is an effective marketing and sales tool. A policy enables to increase presence in new markets, be more competitive by extending higher and longer credit terms to buyers.
Is a smart financial tool as it serves as collateral. Banks view insured clients as competent clients.
Reduces the need for Letters of Credit. If an exporter has a policy, there is no need for his overseas client to issue a LC before buying his products or services.

15. Basic Principles Whole Turnover – ensures spread of risks
Coinsurance – to achieve improvement in the quality of risks through risk participation
Credit Appraisal – to check acceptability of risk
Risks covered
Risks not covered
Amount covered
Rights of subrogation
Existence of debt
Utmost good faith
Indemnity

16. Hedging by Authorized Dealers
EXPORT INSURANCE
Goods
Receivables
Loss or Damage
Exchange Risk
Payment Risk
Hedging by Authorized Dealers
Marine Insurance
Credit Insurance

17. You focus on exports, We cover the risks
RISK MANAGEMENT
How to overcome
Export Credit Risk
E C G C
You focus on exports, We cover the risks

18. Role of ECGC
Providing Credit Insurance Covers to exporters against Credit Risk loss in export of goods & services
Providing Export Credit risk cover to banks to enable exporters obtain better facilities from them
Providing Overseas Investment Insurance to Exporters - Indian Entrepreneurs in Overseas Ventures (Equity/Loans)

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VISION
To excel in providing export credit insurance and trade-related services.
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MISSION
To support the Indian Export Industry by providing cost-effective insurance and trade-related services to meet the growing needs of the Indian export market through the optimal utilization of available resources.

20. A Brief Profile of ECGC Established 1957 No. of Branches 59 Branches
ISO Certification HO and All branches certified
Capital Cr
Rating iAAA by ICRA
Reinsurance Available for ST business
PREMIUM INCOME Cr
RECOVERY Cr
CLAIMS Cr
DIVIDEND Cr
No. of Employees Sanctioned

21. Our Underwriting Capacity……..at a glance
Covering 237 Countries
Covering
Direct Exports
Deemed Exports
Project Exports
Merchanting Exports
Consignment Exports
Services Exports
Software Exports
IT-Enabled Services Exports

22. ……’Contd
offering cover even to the developing markets - Latin America, Africa, Asia & Asean Countries
DP / DA terms are acceptable for cover in these countries
Cover for LC Discrepancies
Cover for LC’s opened by banks with more than 1,00,000/- WR

23. Risks Covered by ECGC RISKS POLITICAL RISK COMMERCIAL RISK COUNTRY
We cover political risks on countries which have been divided into two groups . Group I are those countries under open cover category where political risks are automatically covered on submission of declaration and payment of premium and for restricted cover countries where prior approval for cover for political risks is mandatory for cover even on political risks to be available.
Commercial risk cover is available on buyer for non- LC transactions and for Banks who have opened LCs.
COUNTRY
BUYER
BANK
NON – LC LC
TRANSACTION

24. Risks Covered
Buyer Risks
a) Insolvency
b) Protracted default
c) Failure to accept the goods
LC opening Bank Risks
a) Protracted default
b) Insolvency

25. Risks Covered:
Political Risks
War, Civil War & Internal Disturbances in the buyer’s country
Delay in the transfer of payment
Shipment Diversion
Import Restriction
Causes beyond the control of the exporter and buyer

26. RISKS NOT COVERED Commercial disputes
Causes inherent in the nature of goods
Buyer’s failure to obtain import license
Insolvency / default of Agents
Risks covered by general insurers
Exchange rate fluctuation
Failure of exporter to fulfill terms of contract

27. IMPORTANT CONCEPTS Wholeturnover-principle Options for exclusion.
Co-insurance
Maximum liability
Credit limit
Declaration and Premium
Prior approval for RC Countries

28. BUYER UNDERWRITING FACTORS
Financials, creditworthiness etc.
Feedback – from other insurers
Agreement with Credit Information Agencies
Arrangement with D&B
ECGC’s Past Experience
Exporter’s Experience

29. COUNTRY UNDERWRITING FACTORS
Political Situation
Economic condition
Relationship with India
ECGC’s experience
Experience of other Credit Insurers

30. Products offered to Exporters
Standard Policy
Small Exporters policy
Specific Shipment Policy (short term)
Export Turnover policy
Specific buyer wise policy
Consignment export policy
Global entity policy
Single buyer exposure policy
Multi buyer exposure policy
Software project policy
IT enabled single customer policy
IT enabled multi customer policy
Customer specific (Tailor made) policy

31. ECGC policy covers to exporters fall under 3 categories viz.,
ECGC Policies
ECGC policy covers to exporters fall under 3 categories viz.,
Specific Transaction covers
Turnover covers
Exposure covers
Specific Shipment Policy is a Transaction cover. A single shipment will be insured for Credit risks

32. ECGC Policies 2. Turnover covers:
SCR, SEC and ETP polices are turnover polices. The exporter will insure his entire turnover barring certain exclusions mutually agreed with ECGC. Monthly declaration of shipments under SCR and quarterly declaration of shipments under SEC and ETP will be submitted. Premium is paid on the actual value of shipments declared.

33. ECGC Policies 3. Exposure covers:
MBEP is an exposure based policy. Instead of taking insurance for the entire Turnover, exporter may choose to insure only a lower amount which he considers is at risk and that amount will be the exposure. A minimum of 10% of the projected turnover has to be offered as an exposure for cover ( Aggregate Loss Limit -ALL). On any single buyer 10% of ALL is covered for losses ( Single Loss Limit-SLL). Premium payable on exposure. ITES and MBEP covers are also exposure based covers. Exporter will have option to choose the exposure that meets his risk appetite.

34. ECGC Policies 4. Customised Policies:
An exporter may choose to obtain a customised cover where he may opt for covering select shipments., select risks etc. Normally MBEP cover is taken as the base policy and additional exposure required on a buyer over and above the SLL can be insured under the same Policy or by issuing a Single Buyer Exposure Policy

35. Customer Specific Policy
Small Exporters Policy & SME Policy
Shipments [CR] Policy
To Cover all Transactions
Export Turnover Policy
Multi buyer exposure
To encourage Small Exporters
Export Factoring
For MSMEs
For Large Exporters
SHORT TERM
COVERS
Specific Shipments Policy
Consignment & Global Entity Policy
To cover Consignment exports
To cover Specific Transactions
To cover Services
Services Policy,ITES,Software project
Exports (specific buyer)
Buyer Exposure
To cover Specific Buyer
Tailor made cover
Customer Specific Policy

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