Export Risk Insurance

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MIA and ECGE were formed to cover the commercial, political and credit risks of exporters. There are several maritime perils that are often encountered while exporting. They include perils of the sea, fire, men-of-war and enemies, pirates rovers and thieves,jettison, letters of mart and countermart, capture at sea and Barratry.

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Export Risk Insurance

  1. 1. Chapter 14Export Risk Insurance International Marketing Chapter-14 Export Risk Insurance
  2. 2. Objectives What is marine insurance What is the role of ECGC and export credit risk insurance International Marketing Chapter-14 Export Risk Insurance
  3. 3. Introduction The maritime perils and commercial and political risks the exporters are exposed to and the credit risks the exporters and export financiers encounter are among the serious problems affecting export business. Such risks, therefore, need to be covered so as to protect the interests of the exporters and financiers and to encourage national exports. International Marketing Chapter-14 Export Risk Insurance
  4. 4. Marine Insurance A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extend thereby agreed, against marine losses, that is to say, losses incidental to marine adventure. International Marketing Chapter-14 Export Risk Insurance
  5. 5. Types Of Marine Insurance Time policy Voyage policy Mixed policy Floating policy International Marketing Chapter-14 Export Risk Insurance
  6. 6. ECGC And Export Credit RiskInsurance The Export Credit Guarantee Corporation of India Ltd., a company wholly owned by government of India and which functions under the administrative control of the Ministry of Commerce, have a number of schemes to cover several risks which are not covered by the general insurers. International Marketing Chapter-14 Export Risk Insurance
  7. 7. Objectives Of ECGC1. To provide insurance cover to exporters against political risks and commercial risks.2. To provide insurance cover to exporters against the risk of exchange rate fluctuations in respect deferred payments.3. To provide insurance cover to banks against export credit and guarantees extended by them.4. To provide insurance cover to Indian investors abroad against political risks. International Marketing Chapter-14 Export Risk Insurance
  8. 8. Political Risks1. Imposition of restrictions on remittances by the government in the buyer’s country.2. War, revolution or civil disturbances in the buyer’s country.3. New import licensing restrictions or cancellation of a valid import license in the buyer’s country, after the date of shipment or contract as applicable.4. Cancellation of export license or imposition of new export licensing restrictions in Indian after effective date of contract. International Marketing Chapter-14 Export Risk Insurance
  9. 9. 5. Payment of additional handling, transport or insurance charges occasioned by interruption of diversion of voyage which cannot be recovered from the buyer.6. Any other cause of loss occurring outside India, not normally insured by general insures, and beyond the control of the exporter and/or the buyer. International Marketing Chapter-14 Export Risk Insurance
  10. 10. Risks Not Covered1. Commercial disputes including quality disputes raised by the buyer.2. Causes inherit in the nature of goods3. Buyer’s failure to obtain necessary import or exchange authorization from the authorities in his country4. Insolvency or default of any agent of the exporter or of the collecting bank International Marketing Chapter-14 Export Risk Insurance
  11. 11. 5. Loss or damage to goods which can be covered by general insurers.6. Exchange rate fluctuations7. Failure of the exporter to fulfill the terms of the export contract or negligence on his part. International Marketing Chapter-14 Export Risk Insurance
  12. 12. Summary In order to cover the commercial, political and credit risks of exporters the MIA and ECGE were formed. The maritime perils which may be insured against are• Perils of the sea• fire• Men-of-war and enemies• Pirates, rovers and thieves• Jettison• Letters of mart and countermart, surprisals, taking at the sea• Capture at sea• Barratry International Marketing Chapter-14 Export Risk Insurance

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