Credit Oman provides its export credit insurance support to Omani exporters against the risks of non-payment of exports due to commercial and political (non-commercial) risks. With its credit insurance scheme, the Omani exporters and companies are provided with protection against payment risks, advises on credit worthiness of overseas buyers and guidance to exporters on their collection and recovery of bad debts. Credit insurance is considered an essential and important tool for exporters in mitigating the risks of non-payment. It helps the exporters to sell safely on credit terms and compete effectively against other suppliers. It also gives them the confidence of selling to new and far away or non-traditional markets. By insuring their exports with Credit Oman, policyholders gain better control on their export receivables by keeping tab of the buyers and credit limits approved for cover by the Agency.
Export Credit Insurance provides cover to exporters against commercial and non-commercial risks. These include buyer’s insolvency/bankruptcy, buyer’s failure to pay, buyer rejecting delivery of goods, foreign exchange transfer delay, import bans or cancellation of import licence, payment moratorium, war, civil disorder, natural disasters. Credit Oman’s guarantee reduces the risk and maximizes opportunities of exporters selling in foreign markets. Credit Oman indemnifies exporters if they have not been paid by buyers in the overseas market.
Two different kinds of insurance covers are offered by Credit Oman to exporters under its export credit insurance services — shipment policy and contract policy. Under the shipment policy, credit insurance is effective once the goods are shipped. The goods are standard products, which can be easily marketable. The second one, the contract policy, applies for specially designed goods made according to the request and specifications of the buyer. . Such goods cater to a specific market, with cover commencing from the date of contract.
The buyer risks as well as political or country risks are covered under both policies. The commercial risks for which the exporter is covered include insolvency of the buyer, non-payment of goods accepted by the buyer or refusal by the buyer to accept the goods that comply with the contract. Cover of the political or country risks, also known as non-commercial risks, provides protection to the exporters against risks of non-payment that include intervention to prevent transfer of payments, cancellation of license, civil commotion or acts of war or any action of government of the foreign country which wholly, or partly, prevents performance of the contract, or imposition of new restrictions on exports after date of contract and the failure or refusal on the part of a public buyer to fulfill any of the terms of the contract where Credit Oman has agreed that the buyer is a national government authority.
Another benefit that exporters enjoy is that the Export Credit Policy can be assigned to the exporters’ banker as collateral. This provides an opportunity for exporters to obtain new or enhancement of existing post shipment financing facilities on better or concessional terms than the banks might otherwise have been prepared to offer if the exporter was not credit insured or the policy is not available. Thus, the Export Credit Policy minimizes the risk of non-payment to the exporter and also enables him to obtain necessary and better export financing terms. It provides exporters with greater financial liquidity in managing their foreign receivable portfolios.