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Medium-term ECI, which provides 85 percent coverage of the net contract value, usually covers large capital equipment up to five years. Short-term ECI, which provides 90 to 95 percent coverage against commercial and political risks that result in buyer payment defaults, typically covers (a) consumer goods, materials, and services up to 180 days, and (b) small capital goods, consumer durables, and bulk commodities up to 360 days. Reduces the risk of non-payment by foreign buyers offers open account terms safely in the global market.Ĭost of obtaining and maintaining an insurance policy. Risk sharing in the form of a deductible (coverage is usually below 100 percent). Recommended for use in conjunction with open account terms and pre-export working capital financing.Įxporters assume the risk of the uncovered portion of the loss and their claims may be denied in case of non-compliance with requirements specified in the policy. When foreign accounts receivable are insured, lenders are more willing to increase the exporter’s borrowing capacity and offer more attractive financing terms.ĮCI does not cover physical loss or damage to the goods shipped to the buyer, or any of the risks for which coverage is available through marine, fire, casualty or other forms of insurance.Ĭharacteristics of Export Credit Insurance With reduced non-payment risk, exporters can increase export sales, establish market share in emerging and developing countries, and compete more vigorously in the global market. ECI is offered either on a single-buyer basis or on a portfolio multi-buyer basis for short-term (up to one year) and medium-term (one to five years) repayment periods.ĮCI allows exporters to offer competitive open account terms to foreign buyers while minimizing the risk of non-payment.Įven creditworthy buyers could default on payment due to circumstances beyond their control. ECI also covers currency inconvertibility, expropriation, and changes in import or export regulations. Simply put, exporters can protect their foreign receivables against a variety of risks that could result in non-payment by foreign buyers.ĮCI generally covers commercial risks (such as insolvency of the buyer, bankruptcy, or protracted defaults/slow payment) and certain political risks (such as war, terrorism, riots, and revolution) that could result in non-payment. In other words, ECI significantly reduces the payment risks associated with doing business internationally by giving the exporter conditional assurance that payment will be made if the foreign buyer is unable to pay. Economic Development Organizations (EDO)Įxport credit insurance (ECI) protects an exporter of products and services against the risk of non-payment by a foreign buyer.
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Foreign Direct Investment Attraction Events.Facing a Foreign Trade AD/CVD or Safeguard Investigation?.