Types of EXPORT Insurance

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Credit Insurance

Political Risk Insurance

Marine Insurance

Currency Insurance

Product Liability Insurance


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Meaning :

Credit Insurance covers the risk of your buyerbecoming insolvent or unable to pay the moneyowed to you.

Credit insurance will be able to offer

80-to-90 percent recovery to what was owed.

It also offers information and assistance withrecovery, especially when businesses are

marketing to potential new clients.Insurers will obtain credit reports,financial histories on the debtor, and look at iftheres any adverse information relating todirectors and shareholders, and come back witha recommendation and endorsement.


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Premium :

The premium on credit insurance is negotiatedas a percentage against your expected

turnover at the beginning of the year.

If the actual turnover is under expectations,

the insurer will charge a minimum baseamount and a rate on the lower turnover.

If they achieve more, therell be an

adjustment for over and above.


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Four commercial insurers provide

trade credit insurance :

Atradius.

Coface.

Euler-Hermes. QBE.


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Benefits :

It provides the exporter with comfort in

knowing that theyre not risking thebusiness if something does happen to the

buyer.

It Allows them to extend credit to buyersunknown to the business, but considered

a good prospect by the insurer.

It definitely protects the balance sheet

and gives them more confidence to grow.


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Meaning :

Political risk is the risk of the overseasgovernment intervening in your investments,

which could be the goods you export, or any

assets or business you have in the other country.

Traditionally, PRI would cover a government

expropriating your assets, or passing laws that

block your ability to transfer money out of the

country.

It also covers war risk and political violence, like

civil war or riots, insurrection, upheaval, things

that are beyond the control of the investor.


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Coverage has also widened to include other

constrictions on an exporters ability to do

business :

Import-Export bans, such as :

the restriction of importing machinery to

complete operations; or

A cancellation of export license;

A selective discrimination against foreign

entities where the government changes the

business environment by favoring local

business; A business-to-government contracts where

the government breaches its obligations,

contravening international law.


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Where the PRI product comes into play :

Emerging Economies:

o Weaker governments,

o Weaker law,

o Not as transparent judiciary systems as you

expect in OECD [Organization for Economic

Cooperation and Development] countries.

o Unstable regime in which governments come

and go.


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Who can offer PRIs :

Both commercial and public agencies

can provide political risk insurance,from the World Bank to regional and

multinational commercial and

government providers.


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Meaning :

Financial protection of the shipment of

products and goods, regardless of whether

the mode of transport is over the sea, air,land or post, There are numerous risks to

consider when a business is involved in

transporting goods, including damage to and

loss of the goods.


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Meaning :

Currency insurance is cover against conversion loss.Currency insurance insures the person that they will notlose too much of their money.

The currency insurance is basically there to help theperson if the government in which they are invested wouldnot allow the person to withdrawal their money or if theyhiked up exchange rates and the person lose everything.

It is basically an insurance that protects the investor fromthe political changes that could affect their investments.

This form of insurance is typical of long-range buyingcontracts where other strategies such as forward exchangecontracts are unavailable


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Meaning :

It covers the risks arising from litigation or

the cost of recall should the product you sell

be proved faulty or fail to comply withappropriate regulations.


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Stringent rules and regulations of government.

Restriction on the Exports of Items.

Market dynamics.

Unavailability of common platform to get views,trade ethics and practice.

Lack of know how of export procedure anddocumentation.

Poor relation between production sector and servicesector.


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Higher volume of domestic consumption.

Quality does not meet international parameters.

Higher MSP of food grains announced by

government of India.

Tough competition from China on quality andcost.

Red Tapism.


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Documents

Types of EXPORT Insurance