What Is Export Credit Insurance?

Export credit insurance is a type of credit insurance that covers the losses suffered by exporters due to the commercial risks of importers or the political risks of importing countries in the course of operating export business. A non-profit policy insurance business formulated by the State Council for the safety of insurance reserves provided by the state finance.

Export credit insurance

Export credit insurance refers to the export of goods, services, technology and capital insured by credit agencies to enterprises

Export

Export

To prevent export credit risks, export enterprises can fill out an insurance application form with the export credit insurance company, apply for a buyer's credit limit, and pay the premium after approval by the export credit insurance company, and the insurance liability is established.

The enterprise shall declare all exports within the scope of the insurance on time. If the risks listed in the insurance policy occur, the enterprise may make a claim against the export credit insurance company according to the regulations. Depending on the payment method, credit term and country of export, the premium varies from 0.23% to 2.81%, with an average of 0.9%. If the buyer refuses to pay or refuses to pay, the compensation ratio is 80% of the actual loss; the other is 90%. The benefits recovered by the insurance company from the buyer after payment are redistributed to the insured enterprise in the above proportion.

Insuring export credit insurance can ensure the security of foreign exchange collection and expand the choice of international settlement methods for enterprises (such as T / T, DP, DA, etc. in addition to L / C), thereby increasing export transaction opportunities. At the same time, after the insurance is applied, the credit rating of export enterprises can be improved, which is beneficial to obtaining financial support such as bank packaged loans, collection of collateral, factoring, etc., and quicker capital turnover.

Export credit insurance companies can also provide enterprises with other businesses such as customer credit surveys and account recovery.

-Buyers use international trade to commit fraud and embezzle payment;

-The buyer is in arrears due to its own financial problems, or even fails to pay its debts due to bankruptcy;

-The buyer suspends the contract, refuses to accept the goods, or refuses to pay the goods, asks for a price reduction, etc. due to market problems;

-Due to the imperfect national market system of the buyer, relevant documents and goods.

At the same time, the cost of resolving disputes in the event of trade disputes is also high. Once the situation that cannot receive foreign exchange occurs, it will bring large losses to the enterprise.

By paying relatively limited and fixed insurance premiums, enterprises lock unpredictable risks into fixed pre-tax financial cost expenditures of the enterprise, thereby achieving stable operations.

The principle of maximum integrity, ie

1. Improve market competitiveness and expand

First, special export credit insurance generally covers commercial risks, but government-sponsored credit insurance, such as Chinese export credit insurance companies, also covers political risks in addition to commercial risks. There are also special export credit insurances that cover war risks.
Second, the emphasis on loss-sharing export credit insurance is different from other insurances in that it emphasizes loss-sharing. Generally speaking, even if the insurance company pays, the insured person still has to bear a part of the loss, and this part of the burden ranges from 5% to 15%.
Third, the difficulty of risk investigation is different from general insurance products. The subject matter of the export credit insurance is the credit of a person or an enterprise that does not actually exist. Regardless of the enterprise or the person, its credit level is not a very good investigation. Generally, an insurance company can only judge the size of its credit risk in the future through its past credit history, but in fact this method has a relatively large error.

Reply of the Supreme People's Court on the Application of Relevant Legal Issues in the Trial of Disputes over Export Credit Insurance Contracts

(No. 13 [2013], adopted at the 1575th meeting of the Judicial Committee of the Supreme People's Court on April 15, 2013)

Announcement of the Supreme People's Court of the People's Republic of China

The Reply of the Supreme People's Court on the Application of Legal Issues in the Trial of Disputes over Export Credit Insurance Contracts was approved by the 1575th Meeting of the Judicial Committee of the Supreme People's Court on April 15, 2013, and is now available for public announcement since May 8, 2013 From implementation.

Supreme People's Court May 2, 2013

Guangdong Higher People's Court:

Your institution's "Instructions on the Application of Export Credit Insurance Contract Law" (Yue Gao Fa [2012] No. 442) has received it. After research, the reply is as follows:

With regard to the application of laws on export credit insurance contracts, the insurance law does not make clear provisions. In view of the particularity of export credit insurance, the people's court may refer to the relevant provisions of the applicable insurance law in the case of disputes over export credit insurance contracts; if there is another agreement in the export credit insurance contract, it shall prevail.