A PRESENTATION ON THE CREDIT INSURANCE PRODUCTS

1

• A PRESENTATION ON THE CREDIT INSURANCE PRODUCTS

2
EXPORT CREDIT INSURANCE

• Credit Insurance Covers to exporters against
  Credit Risk losses in export of goods services
  both under Short term and Medium and LT
• Credit Insurance covers to banks to protect them
  against risks of non payment by exporters both
  under Short term and Medium and LT
• Domestic Credit Insurance covers to Exporters and
  Banks in respect of their local sales and working
  capital finance, respectively
• Overseas Investment Insurance covers to protect
  Indian Entrepreneurs investing in Overseas
  Ventures (Equity/Loans) against expropriation
  risks
• Exchange Fluctuation Covers to exporters to
  protect them in respect of their exchange losses
  under Medium and LT exports

3
ECGC An Export Promotion Institution

• Provides credit risk covers to Exporters against
  non payment risks of the overseas buyers /
  buyers country in respect of the exports made.
• Provides credit Insurance covers to banks against
  lending risks of exporters
• Assessment of buyers for the purpose of
  underwriting
• Preparation of country reports
• International experience to enhance Indian
  capabilities
• An ISO organisation excelling in credit insurance
  services

4

• VISION
• To excel in providing credit insurance and
  trade-related services.
• MISSION
• To support the Indian Export Industry by
  providing cost-effective insurance and
  trade-related services to meet the growing needs
  of the Indian export market through the optimal
  utilization of available resources.

5
A Brief Profile of ECGC

• No. of offices 5 Regional
  offices and 51 Branches
• (
  Head office and all Branches ISO certified)
• Paid Up Capital Rs
  900 Cr
• Reserves
  Rs 913.42 Cr
• IRDA registered Insurance company classified
  under General Insurance-Specialised Institution
• Data for 2007-08
• Premium Income Rs 668.36
  Cr
• Claims paid Rs
  419.74 Cr
• Recoveries Rs
  161.50 Cr
• No. of Policies in force
  12533
• No. of shipments covered 364848
• No. of buyers covered
  46799
• No. of countries covered
  193
• No. of banks holding covers 65
• No. of bank branches covered 3709
• No. of exporters financed by banks 20568

6

• Statistics

Particulars Initial Years (1957-60) 2007-08
Premium Rs 43,109 (1957-58) Rs 668.36 crores
Claims Rs 4.51 lacs (1960) Rs 419.74 crores
Recoveries Rs 2.00 lacs (1960) Rs 161.50 crores
Value of shipments covered Rs 1.30 crores(1957 -58) Rs 52766.57 crores
Policies in Force 146 no. (1957-58) 12533 no.
No. of banks covered under Guarantees 3 no. (1960) 65
No. of bank branches 3 no. 3709 no.
Paid up Capital Rs 50.00 lacs Rs 900 crores
7
EXPORT INSURANCE

Goods
Receivables
Exchange Risk
Loss or Damage
Payment Risk
Hedging by Authorized Dealers
CREDIT INSURANCE
Marine Insurance
8
Risks Covered by ECGC
RISKS
POLITICAL RISK (Open Cover and Restricted
cover )
COMMERCIAL RISK
COUNTRY
BUYER
BANK
LC
LC / NON LC
9
RISKS COVERED

• COMMERCIAL RISKS
  
• Insolvency of buyer/LC opening bank
• Protracted Default of buyer
• Repudiation by buyer
• POLITICAL RISKS
• War/civil war/revolutions
• Import restrictions
• Exchange transfer delay/embargo
• Any other cause attributable to importing country

10
Products offered to Exporters

• Standard Policy
• Small Exporters policy
• Specific Shipment Policy (short term)
• Export Turnover policy
• Specific buyer wise policy
• Consignment export policy
• Global entity policy
• Single buyer exposure policy
• Multi buyer exposure policy
• Software project exports policy
• IT enabled (single customer) policy
• IT enabled (multi customer) policy
• SME Policy
• Customer specific policy (Tailor made)

11
Shipments ( Comprehensive Risks) Policy

• Whole Turnover principle- all exports covered
• Selective options for LC/Associates/Consignments
• 90 cover
• Advance Premium subject to Minimum premium of
  Rs.10,000/-
• Policy Period - 2 years
• Credit limit (Drawee wise) on all the buyers
• Monthly declarations with premium due
• Premium rates schedule issued with Policy
• No claim Bonus every year 5 subject to maximum
  of 50

12
Small Exporters Policy

• Export turnover not exceeding Rs.50 Lakhs per
  annum
• Advance Premium subject to Minimum Premium
  Rs.2000/-
• Policy Period - one year
• Cover for Commercial risks 95 and
• Political risks 100
• No Claim bonus applicable
• Quarterly Declarations
• Premium payment as per standard premium schedule
  attached to Policy

13
Export Turnover Policy

• Minimum anticipated Premium of Rs.10 Lakhs
• Period of Policy- One year
• Monthly or quarterly declaration as per
  exporters choice
• Higher Discretionary Limit of drawee wise limits
  on buyers (uptoRs100 lakhs for DP and Rs50 lakhs
  for DA)
• Premium rates discounted by 20
• Premium payable upfront or in Quarterly
  instalments based on anticipated exports
• 5 cash discount for upfront payment of full
  annual premium

14
Specific Shipment Policy (SSP)

• Covering one shipment or One contract
• Processing fee of Rs.1000/-
• 80 cover
• Premium higher than standard premium rates
• Upfront premium before issue of Policy
• Commercial / Political risks and L/C
  comprehensive risks covered
• Submission of Shipment Statement and realisation
  report later

15
Specific Buyer wise Policy

• Covering One buyer / One Bank
• Processing fee Rs.1000/-
• Period of cover - One year
• All shipments to buyer on Non LC terms or
  shipments under LC from bank covered
• Quarterly/Annual premium payable upfront based on
  projected exports
• 80 cover
• Monthly or quarterly shipment statements
• 5 No Claim Bonus reduction on renewal

16
Buyer Exposure Policy

• Cover issued on exposure basis as opposed to
  turnover ( Exposure Likely
  outstanding at any given point of time)
• One time payment of premium on exposure
• Single Premium rate based on country rating for
  Comprehensive risks/Political risks
• Processing fee Rs.1000/- on application
• Cover is up to Exposure or the Loss limit
  (Credit Limit)
• Premium payable either quarterly or annually on
  the loss limit
• No monthly statements
• Annual statement of shipments at the end of
  Policy period on renewal
• Coverage is 80
• Selective cover for each buyer at exporters
  discretion

17
Multi buyer exposure policy

• Cover on exposure as opposed to turnover and
  cover for more than 1 buyer
• Discretion to choose buyers for cover with
  exporter and shall be acceptable to ECGC
• Processing Fee Rs.5000/- to accompany application
• List of buyers to be given with proposal and any
  addition to be advised
• Minimum 10 of projected turnover will be fixed
  as Aggregate Loss Limit (ALL) which will be the
  Maximum Liability
• Exporter can opt for higher exposure than 10 of
  turnover
• Cover for each buyer is 10 of ALL as Single Loss
  Limit (SLL)
• Exporter to have access to ECGC website for
  checking defaulter buyer list.
• Coverage is 80 and lower cover available with
  proportionate reduction of premium. Single
  premium rate irrespective of country grading
• Upfront premium payable before issue or in
  quarterly instalments
• 5 No Claim Bonus reduction on renewal

18
Consignment (Stock holding Agent) Policy

• Consignment exports covered under this exclusive
  cover for a period of 1 year
• Premium on shipments to the agent payable on the
  turnover
• Upfront premium quarterly / annually
• Coverage 80. Exporters holding Standard Policy
  will get 90 cover
• One Agent / Multiple buyers
• Cover on agent or on ultimate buyers as desired
  by exporter
• Credit limits (Drawee wise limits) to be obtained
  on ultimate buyers
• Discretionary Credit limit available upto 5 of
  turnover with max of Rs100 lakhs
• Longer period of 360 days for realization of
  bills
• Premium payable on the basis of country
  classification and tenor of 90/180/360 days.
  Extension upto 540 days permissible with
  additional premium
• 5 No Claim Bonus reduction on renewal

19
Consignment Exports (Global Entity) Policy

• Coverage for selling goods through exporters own
  subsidiary or branch office during a period of 1
  year
• Premium on shipments to the GE payable on the
  turnover
• Upfront premium quarterly / annually
• Coverage 80. Exporters holding Standard Policy
  will get 90 cover
• One GE / Multiple buyers
• Cover on GE or on ultimate buyers as desired by
  exporter
• Commercial cover of Insolvency of GE only if
  Joint stock company and equity stake not
  exceeding 49 Otherwise only Political risks
  cover
• Credit limits (Drawee wise limits) to be obtained
  on ultimate buyers
• Discretionary Credit limit available upto 5 of
  turnover with max of Rs100 lakhs
• Longer period of 360 days for realization of
  bills
• Premium payable on the basis of country
  classification and tenor of 90/180/360 days.
  Extension upto 540 days permissible with
  additional premium
• 5 No Claim Bonus reduction on renewal

20
MSME POLICY

• Policy issued for small exporters with Export
  Turnover not exceeding Rs10 Lakhs and registered
  under MSME Act, 2006
• Cover available upto Rs10 lakhs with annual
  premium of Rs 5,000 and a processing fee of
  Rs1,000
• Cover available will be 90
• Maximum claim payable is Rs3 lakhs on any buyer
• No requirement of monthly declaration of shipments

21
EXPORT FACTORING SERVICES

• Factoring services involving finance, credit
  protection, collection under one roof
• Finance against export receivables facilitated
  through a bank
• Credit protection available after assessment of
  buyers
• Receivables financed without recourse
• 80 prepayment against invoices and balance after
  90 days from due date less charges, if payment
  not received
• Details available on specific request at
  factoring_at_ecgc.in

22
Export Credit Insurance Covers to Banks

• Covers for working capital granted by commercial
  banks to Exporters at Pre shipment and Post
  shipment stages
• Covers available on exporter wise, bank branch
  wise and bank wise
• Losses due to protracted default / Insolvency of
  exporters covered
• Cover varies from 60 to 95 depending on the
  type of cover

23
Export Stimulus Package

• Additional cover of 5, subject to maximum
  protection of 95 available for all MSME
  exporters
• All exporters of Textiles ( including handicrafts
  and handlooms), Gem jewellery, leather,
  engineering goods, carpets, project goods, auto
  components and chemicals will also get the
  additional protection of 5
• Additional cover through the National Export
  Insurance Account of the GOI
• Bank advances to MSME borrowers for exports will
  get an additional protection of 10 subject to
  maximum protection of 85 under the Credit
  Insurance covers to banks
• Additional cover available for shipments
  /advances made/ granted during the period 1st Jan
  09 to 30th June 09

24
In the Service of Exporters and Banks since 1957
Thank You Please visit us at
www.ecgc.in Mail us at marketing_at_ecgc.in