1. CHAPTER XXXII EXPORT CREDIT INSURANCE
Functions of Export Credit Insurance
Risks Covered
Risks Not Covered
Export Credit Insurance Programs

2. Export Credit Insurance
Purpose:
To protect exporters against the risk of nonpayment by foreign debtors due to commercial or political reasons
When:
When exports being conducted without an irrevocable, confirmed Letter of Credit
Exports on Open Account or D/A or D/P

3. Functions of Export Credit Insurance
Reduces export risk of not being paid
Enhances an exporter's ability to obtain favorable export financing
Enables an exporter to offer competitive credit terms to an importer
Enables an exporter to penetrate high-risk foreign markets
Provides greater liquidity and flexibility of foreign accounts receivable

4. Risks Covered Commercial Risks
Inability or unwillingness of a foreign buyer to pay due to commercial reasons
Economic deterioration in the buyer's market
Fluctuations in demand
Unanticipated competition
Technological changes
Buyer’s insolvency, bankruptcy, default
Natural disasters: floods, fires and earthquakes

5. Risks Covered 2) Political Risks War Revolution and insurrection
Boycotts
Expropriation of buyer's business
Revocation of import or export licenses after shipping
Foreign exchange control: Currency inconvertibility
Shifts in tariffs

6. Risks Not Covered
Shipments not complying with requirements of coverage
Shipments not reported to the insurer
Shipments which buyer refuses to accept
Disputed shipments until they become a legal obligation of the buyer
Losses due to the fault of exporter, agent or administrator
Claims not filed timely with the insurer

7. Export Credit Insurance Programs
Export-Import Bank of the United States (Ex-Im Bank)
FCIA Management Company, Inc. (FCIA)
Euler Hermes American Credit Indemnity (AIC)
Coface North America
Lloyd’s London

8. Export-Import Bank of the United States (Ex-Im Bank)
Short-Term Multi-Buyer Export Credit Insurance Policy
Short-Term Single-Buyer Export Credit Insurance Policy
Medium-Term Single-Buyer Export Credit Insurance Policy
Small Business Multi-Buyer Export Credit Insurance Policy
Small Business Express Export Credit Insurance Policy
Lease Export Credit Insurance Policy

9. Short-Term Multi-Buyer Export Credit Insurance Policy
Policy Description
One-year blanket policy insuring short-term export credit sales to many different buyers
Repayment terms up to 180 days, 360 days for qualifying transactions: agricultural commodities, fertilizer and durables
Products of minimum 51% U.S. content excluding markup and non-military goods

10. Short-Term Multi-Buyer Export Credit Insurance Policy
Coverage
95% of the invoice amount for both commercial risks and political risks
98% for Bulk agricultural commodities
100% for sovereign obligors

11. Short-Term Multi-Buyer Export Credit Insurance Policy
Credit Limits
Credit limits are granted by Ex-Im Bank in accordance with exporter’s experience
Credit limits allow exporter to extend insured credit without prior approval from Ex-Im Bank
Ex-Im Bank must pre-approve amount over the credit limit in the policy and in certain countries per Country Limitation Schedule
Exporter must obtain credit information on the buyer to show its creditworthiness

12. Short-Term Multi-Buyer Export Credit Insurance Policy
Premium Rates and Payments
Premium rates are calculated based on type of buyers, length of credit terms, spread of country risk, transaction type, and previous export experience of the exporter.
Premiums are paid monthly with shipment report
Exporter must pay a one-time, refundable advance premium of $500 to get a policy. No annual minimum premium

13. Short-Term Multi-Buyer Export Credit Insurance Policy
 Reporting Requirements
Shipment report: By the end of next month with a premium check
Include all shipments under Irrevocable unconfirmed L/C, D/A, D/P, Open A/C, except Irrevocable confirmed L/C and advance payment, military goods
Overdue report: Past due over 90 days on amounts over $100,000

14. Short-Term Multi-Buyer Export Credit Insurance Policy
Filing Claims:
To be filed between 90 days and 240 days from due date
Ex-Im Bank will pay valid claim in 60 days of receiving complete claim documents

15. Short-Term Multi-Buyer Export Credit Insurance Policy
Characteristics:
Policy proceeds assignable to lenders with prior approval of Ex-Im Bank
Deductible may be fixed for policy year & vary with volume
Political risk only policy available
Special coverage with special endorsement and additional premiums
Preshipment Coverage
Non-acceptance Coverage
Consignment Stock Coverage
Sales from Overseas Warehouse Coverage

16. Short-Term Single-Buyer Export Credit Insurance Policy
Policy Description:
Single or multiple shipments to a single foreign buyer
Goods of minimum 51% U.S. content and non-military goods
Repayment terms: Up to 180 days & 360 days for qualifying transactions: agricultural commodities, fertilizer, consumer durables, capital equipment
Submit application on buyer with credit report & trade references

17. Short-Term Single-Buyer Export Credit Insurance Policy
Amount of Coverage:
Sovereign obligors 100%
Public & Private sector obligors 90%
Unconfirmed Letter of Credit transactions 95%
Bulk agriculture 98%
No first loss deductible

18. Short-Term Single-Buyer Export Credit Insurance Policy
Minimum Premiums
Sovereign Buyers or Political risk only:
Small Business Exporter: $500
Other $750
Financial Institutes:
Other $1,500
Non-Financial Institutes:
Other: $2,500

19. Short-Term Single-Buyer Export Credit Insurance Policy
Claims and Payments
Must file a Notice of Claim and Proof of Loss Form between 90 days and 240 days from the due date
Ex-Im Bank will pay within 60 days of receiving complete claim documents

20. Short-Term Single-Buyer Export Credit Insurance Policy
Characteristics
Exporter is not required to insure all credit buyers
Policy proceeds may be assigned with prior approval
No first lost deductible
Special coverage with special endorsement & additional premiums
Preshipment Coverage
Non-acceptance Coverage
Consignment Stock Coverage
Sales from Overseas Warehouse Coverage

21. Medium-Term Single-Buyer Export Credit Insurance Policy
Policy Description:
U.S. capital goods and related services
One to five years. Occasionally longer payment terms up to 7 years
No-military goods
Written on a case-by-case basis

22. Medium-Term Single-Buyer Export Credit Insurance Policy
Coverage:
15% cash down payment by a foreign buyer before delivery of the goods
Lesser of 85% of exporter’s contract value or 100% of the U.S. content
100% of financed portion against commercial and political risks
Creditworthy foreign buyer in acceptable country per Country Limitation Schedule

23. Medium-Term Single-Buyer Export Credit Insurance Policy
Repayment Terms
Less than $80, years
$80,000 to less than $175,000 3 years
$175,000 to less than $350,000 4 years
$350,000 or more 5 years

24. Medium-Term Single-Buyer Export Credit Insurance Policy
Premium Payments
Premium amount is determined by using a risk-based pricing system. No published rates
Under a single shipment policy, premium must be paid before a policy is issued
Under a repetitive policy, by last business day of the month following each shipment

25. Medium-Term Single-Buyer Export Credit Insurance Policy
Filing Claims
Report all buyers who fall into default within 30 days on a monthly basis
Waiting periods and deadlines for filing claims vary with the type of loss incurred

26. Small Business Multi-Buyer Export Credit Insurance Policy
Policy Purpose:
Small businesses new to exporting or only occasionally exporting
Help small businesses increase international sales by extending competitive credit terms while minimizing credit risks
Also financing tool by offering insured foreign receivables as collaterals

27. Small Business Multi-Buyer Export Credit Insurance Policy
Policy Description:
All shipments on credit terms to all eligible countries
Policy period: 1 year. Renewed annually
51% U.S. content excluding markup
Repayment terms: Up to 180 days for most goods
360 days for qualifying transactions: agricultural commodities, fertilizer, consumer durables

28. Small Business Multi-Buyer Export Credit Insurance Policy
Coverage:
95% for commercial risks
95% for political risks
No first-loss deductible

29. Small Business Multi-Buyer Export Credit Insurance Policy
Eligible Exporters:
Must be a small business determined by U.S. SBA under North American Industry Classification System (NAICS)
Annual export credit sales volume averaging $7.5 million or less for past 3 years
Positive net worth and at least one year successful operating history

30. Small Business Multi-Buyer Export Credit Insurance Policy
Premium Rates and Payments:
Premiums paid according to a rate schedule
One-time refundable advance premium $500, but no minimum annual premium
Submit a monthly Report of shipment with premium payment

31. Small Business Multi-Buyer Export Credit Insurance Policy
Credit Limits:
Credit limits without prior approval from EX-Im Bank is stated in the policy
Granted in accordance with exporter’s experience
Exporter must obtain credit information on buyer to show its creditworthiness
EX-Im Bank must pre-approve amounts over the credit limits in the policy

32. Small Business Multi-Buyer Export Credit Insurance Policy
Policy Assignment:
Can assign policy proceeds to lenders with approval of Ex-Im Bank

33. Small Business Express Export Credit Insurance Policy
Policy Description:
A “named buyer” policy
A streamlined online application provides a policy quote and credit decisions up to $300,000 on foreign buyers within five workdays.
Credit reports on all buyers the exporter elects to insure are made by the Ex-Im Bank free of charge.

34. Small Business Express Export Credit Insurance Policy
Policy Description:
Insurance premiums are payable only upon an exporter’s shipment to a buyer pre-approved by the Ex-Im Bank.
No application fees.
A one-time, refundable $500 advance deposit is required at a quotation acceptance to issue the policy.

35. Small Business Express Export Credit Insurance Policy
Applicant’s Qualifications
A small business
An average of less than $7.5 million in export credit sales over the last three years
At least one year business operating history
A positive net worth.
Ten or less existing foreign buyers sold to on credit terms
A DUNS # with Dun & Bradstreet.

36. Small Business Express Export Credit Insurance Policy
 Eligible Transactions
Exported products manufactured in and shipped from the United States
More than 50 percent U.S. content.
Maximum credit terms are generally 180 days,
but up to 360 days for capital goods, bulk, unprocessed agricultural commodities or other qualifying transactions.

37. Small Business Express Export Credit Insurance Policy
Coverage
95% Commercial losses
Insolvency, bankruptcy, and default
95% Political losses
War, revolution, cancellation of import or export licenses, currency inconvertibility
There is no first-loss deductible.

38. Small Business Express Export Credit Insurance Policy
Premium Rates and Monthly Shipment Report
The premium rates for private sector buyers are
$0.65 per $100 of gross invoice value for 1-60 days,
$1.06 for days,
$1.35 for days of payment terms.
Shipments must be reported and premiums have to be paid by the last day of the month following month of shipment.

39. Small Business Express Export Credit Insurance Policy
Overdue Invoices and Filing Claims
Online overdue reports on past due over 90 days for more than $25,000.
Claims may be filed no earlier than 90 days and no later than 240 days after the due date
Insurance claims are paid within 60 days of receipt of all required documents.

40. Lease Export Credit Insurance Policy
Policy Description
Operating lease
Lease whose term is short compared to the useful life of the leased asset with a high residual value at end of lease
Ship (10-yr lease, 30-yr useful life), Aircraft, Automobile
Finance lease: One of the conditions
Ownership transferred to the lessee at the end of lease
Lease term 75% or more of asset’s useful life
Present value of lease payments 90% or more of original cost
Option to buy at much less than fair market value

41. Lease Export Credit Insurance Policy
Eligible Lessors
any leasing company, manufacturer, bank, or other entity, foreign or domestic, that leases or finances leases of U.S.-manufactured equipment and services outside the United States.

42. Lease Export Credit Insurance Policy
Operating Lease Export Credit Insurance Policy
Coverage for Streams of Payments
the stream of payments falling due during a repossession-efforts period after default of the lessee.
100% for sovereign lessees and 90% for non-sovereign lessees. Usually is for up to five months
Coverage Against Governmental Prevention of Repossession
Political risks of prevention of repossession
100%

43. Lease Export Credit Insurance Policy
Finance Lease Export Credit Insurance Policy
Lease in which there is little residual value and ownership is transferred to the lessee at the end of the lease.
15% advance payment from the lessee to the lessor Ex-Im Bank insures remaining 85 percent of the lease transaction.
Coverage is 100%.

44. Lease Export Credit Insurance Policy
 Policy Issuance
Both the Operating Lease and the Finance Lease policies cover single transactions.
A separate policy is issued for each lease insured with Ex-Im Bank.

45. Lease Export Credit Insurance Policy
Claims
Operating Lease Policy
Claims may be filed at the date of repossession of the asset or the end of the repossession-efforts period but not later than 120 days after this period.
Finance Lease Policy
Claims may be filed from 120 to 240 days after default.
Ex-Im Bank pays properly submitted and documented lease policy claims within 60 days of receipt of a claim.

46. FCIA Management Company
Foreign Credit Insurance Association (FCIA) was formed in 1961 as an Association of 50 leading insurance companies in cooperation with Ex-Im Bank of the U.S.
To promote U.S. exports through a credit insurance safety net
In 1991, the Association became solely a private entity as FCIA Management, Inc.

47. FCIA Management Company
FCIA is now a unit of Great American Insurance Co., Inc. of Cincinnati, Ohio.
All policies issued by FCIA are written in the name of Great American Insurance.
FCIA makes its products available exclusively through brokers and independent agents
International Associates in Downy, California
Export Insurance Services, Inc. in Augusta, Georgia

48. Euler Hermes American Credit Indemnity (ACI)
Euler Hermes is the world’s leading credit insurer with a 34% share of the market.
It operates in more than 50 countries and assists companies of all sizes and in every industry sector to develop their business securely

49. Coface North America
Coface North America is a unit of the Coface Grouop, a world leader in trade-risk management.
In 2003, Coface acquired the CNA Credit unit to enter the credit insurance market in the United States and Canada.
It provides accounts receivable insurance and political risk insurance

50. Lloyd’s of London
Lloyd's is not a company, it's a market where its members join together as syndicates to insure and reinsure risk.
Specialists with underwriting expertise and talent.
Conducting business in over 200 countries and territories worldwide.
Credit insurance and political risks insurance to the international business community