Phillip Krinker

Five Reasons to Invest in Export Credit Insurance

17th January 2019 Phillip Krinker 0 Comments

the market, it is still little known and used by Companies.  

This type of Credit Insurance provides coverage for exports to clients abroad.  Its various benefits lead to an even greater added value for the operations of exporting companies that opt to contract this insurance.   

Below follow the five reasons why your company should invest in Export Credit Insurance:     

  1. Maximization of credit sales with the possibility of leverage

In addition to contributing to the expansion of sales in markets that are already known and being served, Export Credit insurance is an important ally  in assisting companies to expand their operations to unexplored markets.   The different particularities of each market, and of each region of the globe, make it difficult to guarantee safe sales conditions, and at the same time  gain competitivity. In this regard, Credit insurance can provide an advantage, in as much as it eliminates the letter of credit requirement, and enables companies to offer its clients extended payment terms. 

  1. Analysis and Monitoring of your international clients

The analyses of financial information on foreign buyers and commercial restrictions in foreign countries are complex.  Therefore, as credit insurers are multinational companies, with offices in dozens of countries, and up-to-date databanks on millions of companies with this type of insurance, they can more easily analyze and constantly monitor your buyer portfolio, and assist you in determining credit limits, as well as the moment to reduce or eliminate exposures.       

  1. Guarantee of 90% of the Invoice value

If the buyer does not meet its payment obligations and the insurer is unable to collect the debt within a short space of time,  the insurer, on average, will indemnify 90%  of the invoice value. In that case,  the insurer is subrogated to the insured’s rights in the invoice, and the insurer will proceed with its collection efforts, and should it in the future be successful, it will pay the outstanding 10% to the insured.      

  1. ACE and Proex

Credit insurance can be used to back ACE and Proex financial transactions. Therefore, receivables covered by insurance can be assigned to banks that provide these incentive lines. Especially, the Bank of Brazil, which is the most relevant beneficiary, since it is responsible to the Brazilian government for releasing the Proex funds.

  1. Political risks cover

Another important protection feature of Export Credit insurance is the cover for Political  Risks.  Extraordinary situations (payment moratorium and war, among other issues) can prevent the  exporter from receiving remittances, in spite of the importers sending the remittances from their countries.  Therefore, Export Credit insurance is an important ally for the protection of company operations against extraordinary events.  

As you will perceive, Credit insurance can be a very valuable tool to cover export sales.
Do contact us to understand how it can help your business. Do you still have any doubts? Please check our e-book for the answers to some of the more frequent questions: 

Guia Definitivo sobre o Seguro de Crédito