Q.What is Export Credit Insurance? A. Export Credit Insurance provides risks protection to the exporter who sells on credit terms against non-payment by his buyers. Non payment may by due to buyer's insolvency, protracted default, non-acceptance of goods or economic and political conditions which are out of the control of the exporter and buyer.
Q.Why should I avail credit insurance service as I have no bad debts in the past? A.The Credit Insurance Policy is a risk management tool and it helps you to stabilize your cash flow and protect your trade receivables in the ever-changing competitive and economic business climate. Also you can enhance your borrowing power from financial institutions.
Q.Can I insure a buyer in my own country? A.Yes, a Domestic Credit Insurance Policy addresses the payment risks from buyer in the same country.
Q.How does credit limit operate? A.The credit insurer issues a credit limit for every buyer with whom the policyholder trades. The level of the limit is set at the maximum amount that can be owed by the buyer at any time. The granted credit limit is the maximum insured credit line for a specific buyer which operates on revolving basis and the policyholder can trade within the approved credit limit throughout the policy period without further reference to the Insurer.
Q.What is the insured percentage under Credit Insurance Policy? A.The insured percentage is up to 80% of loss against commercial risks and 85% against non-commercial risks.
Q.Why does ECGA charge premium on total business declared, when it exceeds the credit limit amount? A. As per the policy, the premium is payable on actual export and domestic sales made to various buyers on whom credit limit have been issued and not on the credit limit amount. However, the Agency charges premium on sales declared by the policyholder in excess of credit limit due to the fact that those export sales made in excess of credit limit also be automatically covered once previous shipments are paid. If no premium is charged on those sales, it is off cover in accordance with the terms of the Policy in the event of non-payment by the buyer.
Q.How and when do I file a claim? A.You can file your claim when you are aware of any adverse information which may affect the payment of your invoices related to credit insured sales. Our Claim and Recovery Department will provide full assistance to you to file a claim and recommend appropriate measures to minimize your losses.
Q.Why should I consider insuring my business under Irrevocable Letter of Credit? A. An Irrevocable Letter of Credit provides guarantee / security for receiving your payment of export bills provided the terms and conditions of the letter of credit are strictly complied with. However, certain events of political nature in buyer's country could prevent performance of sales contract or transfer of funds. In such circumstances, the Export Credit Policy of ECGA provides you protection against such losses.
Q.Do you provide credit insurance cover for all countries? A. Yes, ECGA provides credit insurance cover to a wide spread of countries worldwide and ECGA also insurers domestic sales.
Q.What action to be taken by the exporter if the buyer requests for extension of due dates of payment? A. If a buyer who is unable to make payment of the due date and requests for more time to pay the amount, the exporter should make a good commercial judgment on the request based on facts and circumstances of the case. If it appears that extending the due date of the bill is the proper course of action, then the exporter should seek the approval of the Insured (ECGA), giving in details the reasons justifying such action.