What does it cost to credit insure ?
Relatively little, though premiums vary, depending on the buyer, the payment terms, and the economic and political environment of the buyer's market. The schedule of the premium rates is available at ECGA to the exporters upon request.
What Happens When Losses Occur?
The exporter is normally covered up to 80% of loss in case of buyer's default or insolvency (commercial risk) and up to 85% for the country risk (political risk). But you must also as the insured, do your best to provide relevant information as ECGA tries to minimize losses. When the buyer fails to accept or take the goods, in accordance with the contract, the exporter bears a 'first loss' of 20% and ECGA bears 80% of the balance.
The time at which claims are paid varies according to the cause of loss, but provided a fully-documented claim is submitted promptly and is accepted, payment is normally made :-
Immediately on proof of buyer's insolvency.
Six to twelve months after due date of payment for protracted default on goods accepted.
One month after resale if the original buyer had failed to take up the order.
Six to twelve months after due date for most other causes of loss
ECGA will assist your recovery action. Payments are usually made in Omani Rials, except in special instances, and normally settled after six months of the loss having occurred, depending on the cause of the loss.
Why Not Insure Today?
It is clear from the reasons and for the benefits mentioned that the exporter should make credit insurance an integral part of his marketing strategy. Bear in mind, too, if you are an exporter, that your competitor may have already been credit insured and for that reason can offer better credit terms than you can unless you have also hedged against the credit risk.
Your Export Credit Policy as a Financing Tool
ECGA aims to encourage and maximize the sale of Omani produced goods. One of the most important areas is that of export financing.
While credit protection is important, we at ECGA are also aware you might need additional help to finance your exports. For this reason, The Export Credit Policy
is so designed to allow you to use it as an additional form of security to your banker.
Most banks will usually look to their customers for collateral to secure the risk of non-payment of any loan or advance extended to finance an export trade credit. The Export Credit Policy protects the customer against loss due to non-payment for events outside the exporter's control. The benefit of this protection is that it can be assigned to the financing bank under a simple procedure in a Letter of Authority (L/A)
and is accepted by the banks as a valuable form of additional collateral not otherwise available. In consequence the export credit insured exporter can expect to enjoy improved financial facilities and in many cases concessional interest rates.
PRE-SHIPMENT CREDIT GUARANTEE SCHEME
Export Credit Guarantee Agency issues Pre-Shipment Credit Guarantee to commercial banks on behalf of exporters in order to assist them in obtaining pre-shipment financing facilities for the purpose of purchasing raw materials, processing / manufacturing, packing of goods to be exported. The guarantee scheme allows the banks to finance the exporters at liberal terms as the guarantees cover the non-payments of advances granted to the exporters due to the following financial risks :
Insolvency of the exporter
Protracted default by the exporter
Credit Alliance Network
ECGA had joined as a full fledged partner of the prestigious Credit Alliance Network under the auspices of COFACE
- the French Export Credit Insurance Agency since 1st June 1996. The Credit Alliance is an international network of several Export Credit Insurance Agencies in different countries as well as COFACE
owned subsidiaries. ECGA is fully integrated through the Alliance. The Partners within the Alliance share and exchange information electronically. Other services utilized among the partners in the Alliance include underwriting, debt collection, reinsurance of international risks, etc.