Types of EXPORT Insurance

Credit Insurance Political Risk Insurance Marine Insurance Currency Insurance Product Liability Insurance
Meaning : Credit Insurance covers the risk of your buyer becoming insolvent or unable to pay the money owed to you.
Credit insurance will be able to offer 80-to-90 percent recovery to what was owed. It also offers information and assistance with recovery, especially when businesses are marketing to potential new clients. Insurers will obtain credit reports, financial histories on the debtor, and look at if theres any adverse information relating to directors and shareholders, and come back with a recommendation and endorsement.
Premium :
The premium on credit insurance is negotiated as 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 base amount and a rate on the lower turnover. If they achieve more, therell be an adjustment for over and above.
Four commercial insurers provide trade credit insurance : Atradius. Coface. Euler-Hermes. QBE.
Benefits :
It
provides the exporter with comfort in knowing that theyre not risking the business if something does happen to the buyer. It Allows them to extend credit to buyers unknown to the business, but considered a good prospect by the insurer.
It
definitely protects the balance sheet and gives them more confidence to grow.
Meaning : Political risk is the risk of the overseas government 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.
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.
Where the PRI product comes into play :

Emerging o o o
Economies: Weaker governments, Weaker law, Not as transparent judiciary systems as you expect in OECD [Organization for Economic Cooperation and Development] countries. Unstable regime in which governments come and go.
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.
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.
Meaning :
Currency insurance is cover against conversion loss. Currency insurance insures the person that they will not lose too much of their money. The currency insurance is basically there to help the person if the government in which they are invested would not allow the person to withdrawal their money or if they hiked up exchange rates and the person lose everything. It is basically an insurance that protects the investor from the political changes that could affect their investments. This form of insurance is typical of long-range buying contracts where other strategies such as forward exchange contracts are unavailable
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 with appropriate regulations.
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 and documentation.

Poor relation between production sector and service sector.
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 and cost.

Red Tapism.

Types of EXPORT Insurance

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Types of EXPORT Insurance

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Credit Insurance Political Risk Insurance Marine Insurance Currency Insurance Product Liability Insurance

Where the PRI product comes into play :

Who can offer PRIs :

Stringent rules and regulations of government.

Lack of know how of export procedure and documentation.

Higher volume of domestic consumption.

Tough competition from China on quality and cost.

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