Export Credit Insurance

Definition

Export Credit Insurance. It is a policy to cover some of the riskier areas faced by vendors  in exporting their products/services, that is, nonpayment due either to the insolvency of the buyer (commercial risk) or political events (political risk).

Export credit insurance is frequently mentioned in connection with export credit guarantees. While guarantees cover financial institution export loans, insurance policies are issued directly in favor of the vendors. In many emerging countries, this typeof insurance is either not available or is very expensive.

Several types of export credit insurance are available. These differ from country to country according to the needs of the local organization community.The most widely used types of export credit insurance include the following:

• short-term export credit insurance
• medium and long-term export credit insurance
• investment insurance
• external trade insurance, and
• exchange risk insurance.