Today, in the world of International Business or Global Trade all countries are dependent on exporting goods and services across international boundaries. However, all business transactions come with risks. Export-Import Insurance policies are becoming ever more noticeable.
What is Export Credit Insurance?
A type of insurance which protects a company is known as export credit insurance. Export Credit Insurance (ECI) protects against the risk of non-payment by a foreign buyer. If one’s company is an exporter or importer – or both – then having the relevant insurance cover in place is essential to ensure the continued success of the company in the future.
As international trade presents multiple risks ECI can be the perfect way to help exporters in solving this problem and focusing on their core business. Export Insurance, in its various forms, can not only make one more comfortable about doing overseas business, it even allows one to focus on, and grow their business internationally.
Types of Export Credit Insurance:
There are various kinds of export insurance which vary from country to country. There are five types of insurance generally used worldwide.
Credit insurance, or trade credit insurance, is the most popular form of export insurance. Suitable for any business that extends credit to their overseas buyer, credit insurance coverage. “Credit insurance wants to get 95% recovery to what was owed.”
Political Risk Insurance
Political Risk Insurance (PRI) is another type of coverage exporter. In PRI, the overseas government intervenes in exporter’s investments, which could have been one or more assets.
It is considered one of the most crucial insurance for goods exporters. Financial protection of the shipment of products and goods is insured, regardless of the mode of transport over the water, air or land.
Various foreign exchange management strategies can be used to reduce losses through currency movements. Some financial institutions and foreign exchange providers.
Product Liability Insurance
The product should be faulty or fail to comply with appropriate regulations.
Benefits of Export Insurance
- Reduces the risk of non-payment by foreign buyers
- Gain access to overseas working capital
- Increased competitiveness
- Improved cash flow by borrowing against foreign receivables
Export Insurance gives assurance and flexibility to one’s business. It is always recommended to use Export Insurance for cover risk and maximize upside. Companies who opt to use an export credit insurance benefit.