Export Credit Insurance

Export credit insurance is a type of credit insurance that exporters purchase from insurance institutions to mitigate importers' credit risks (such as refusal to accept goods, payment default, bankruptcy, etc.) and political risks (such as war in the importing country, foreign exchange controls, import bans). Its main use scenarios include: when exporters settle transactions through non-letter of credit methods such as open account (OA), documents against acceptance (D/A), or documents against payment (D/P), or when exporting to high-risk countries/regions. Precautions: The coverage ratio is usually not 100% (e.g., 80%-90%), and premiums vary depending on the country, payment method, and credit term; after insuring, the exporter must fulfill obligations such as truthful disclosure and timely reporting of losses; after a loss occurs, the exporter must first seek recovery from the importer, and only if unsuccessful can a claim be filed. Differences from other terms: It is different from cargo transportation insurance (which covers physical loss of goods), as export credit insurance covers importers' credit risks and political risks; it is also different from export factoring (where the factor buys out accounts receivable and provides financing), as credit insurance only provides risk protection and does not directly provide financing.