Medium and Long-term Credit Insurance

Medium- and long-term credit insurance is a type of export credit insurance that mainly covers losses on accounts receivable arising from export trade or overseas investment projects with credit terms of more than one year (usually 1 to 5 years, or even longer), due to commercial risks (such as buyer bankruptcy or default) or political risks (such as war, foreign exchange controls, or expropriation). It is mostly used for exports of capital goods such as large complete plant equipment, ships, and overseas engineering contracts, or as supporting insurance for medium- and long-term export credits from banks. Notes: Enterprises need to insure before signing the export contract, and premiums are usually higher than those for short-term credit insurance; the policy may require the buyer to provide a sovereign guarantee or bank guarantee. The difference from short-term credit insurance is that the latter covers exports of consumer goods or raw materials with credit terms of no more than one year, with more diversified risks and lower rates. Medium- and long-term credit insurance is often combined with export credit to help exporters obtain bank financing while reducing foreign exchange collection risks.