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Export credit insurance is based on the credit risk of foreign buyers in export trade and overseas investment as the object of insurance, and the legal rights that export companies should enjoy in the implementation of export contracts are the insurance marks for insurance. Export credit insurance is a non-profit policy insurance business. The provision of insurance reserves by the national finance is formulated by the state to promote domestic export trade and guarantee the security of foreign exchange collection by exporting enterprises. At present, China Export-Import Bank and the People's Insurance Company of China can provide export credit insurance services.
Exporters insured by export credit insurance can not only guarantee the security of foreign exchange collection, improve their competitive position and capabilities in the international market, but also implement the "export diversification" strategy and further open up new markets. The insurance can also provide exporters with credit information investigation services to help exporters gain access to financial services, help resolve capital turnover difficulties, expand operating capacity, recover debts, and reduce losses for businesses and countries.
Export credit insurance category At present, the insurance liability of export credit insurance includes commercial risk and political risk. Commercial risks include the buyerâ€™s inability to repay the debt and bankruptcy, the buyerâ€™s rejection of the goods and refusal to pay the purchase price, the buyer defaulting on payment. The political risks include: the buyerâ€™s country prohibits or restricts the exchange, the buyerâ€™s national import controls, the buyerâ€™s state cancels the import license, the third country that the buyerâ€™s country or payment goes through has a deferred payment order, war, riot or revolution, and the insured and the buyer Uncontrollable extraordinary events.
According to Ms. Cai Wei of the International Insurance Department of the Guangdong Branch of the People's Insurance Company of China, insured by export credit insurance, the above-mentioned risk losses of exporters will be compensated. In 1998 alone, they had paid more than 830,000 U.S. dollars to exporters due to risks such as bankruptcy, arrears, rejections, and financial crisis in Southeast Asia, and nine exporters had benefited.
According to the different credit terms stipulated in the export contract, the export credit insurance business is divided into short-term export credit insurance and medium and long-term export credit insurance. The term of application for short-term export credit insurance shall be within 180 days, and shall not exceed 365 days, and commercial credit payment methods shall be adopted. Short-term export credit insurance can help exporters to secure foreign exchange, export financing, and conduct buyer surveys. Medium- and long-term export credit insurance applies to exports with a credit period of more than one year, and generally no more than 10 years.
How to save insurance costs Although many exporters are aware of export credit insurance, few people ask for such insurance. According to Ms. Caiâ€™s analysis, this is mainly due to the issue of insurance premiums. The export cost is still high, and there is no use of space anymore, and it is even more difficult to increase profits by increasing the export credit insurance premium. In this case, most exporters prefer to follow the practice of the past.
So, how can we not only purchase export credit insurance, but also save some money? First, before signing a contract with foreign investors, it should be considered as a normal cost item. Ms. Cai said that if exporters can realistically abide by the provisions of insurance clauses and fulfill the obligations of the insured, they must resolutely eliminate the phenomenon of misbehaving, underreporting, or wilfully failing to report. They should fill out export declarations on a case-by-case basis and pay the insurance company as scheduled. Insurance premiums, and actively cooperate with insurance companies in risk prevention, can minimize insurance premiums.
Because, first, the rate of export credit insurance depends on the risk category of the buyerâ€™s home country, the degree of risk of the payment method, and the length of the credit period. Exporters should carefully select and comprehensively control the transaction before and after the transaction; and second, from the insurance In terms of normal operations, insurance companies must implement their basic functions of compensating for economic losses through the collection and establishment of insurance funds, and the financing of insurance funds is accumulated through the collection of insurance premiums.
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