This document discusses various risks exporters face and insurance options to mitigate those risks. It outlines risks of loss or damage of goods, non-payment, political or economic instability, and more. It then describes types of insurance policies like export credit insurance and marine insurance that can cover losses from these risks. Export credit insurance protects against non-payment, while marine insurance covers cargo losses during transport. The Export Credit Guarantee Corporation of India provides similar export credit insurance support for Indian exporters.

1. As an exporter of goods or services you will need to be aware of and consider
insuring against the risks of:
 loss of or damage to goods in transit
 non-payment for your goods or services
 the cost of returning to your premises any goods that a buyer abroad
refuses to accept
 political or economic instability in the buyer's country
 a new customer's credit worthiness
 currency fluctuations
 a fault that causes an end-customer to sue

2. Foreign currency and exchange risks
 When you trade internationally, you should also take steps to protect your
business against changes in the exchange rate.
Loss or damage of goods
 The goods you export or import must have insurance cover from the
beginning of their journey until their arrival with either yourself or the buyer.
Product faults
 In exceptional circumstances, a fault with the product supplied may result in an
end user taking legal action against your business. Depending on the nature of
your product or service, you may need to take out insurance to cover this risk.

3. Non-payment
 You might not be paid in full for the goods or services that you export
because:
 your customer can't or won't pay
 war or a natural disaster prevents your goods from reaching the customer, or
you from completing your contract
 political reasons prevent you from completing your contract, such as an export
licence ban in the UK, or import restrictions or a change in the law in the
buyer's country
 currency problems prevent your buyer from getting the cash they need to pay
you

4. Risk Covering Documents
 Insurance Policy or Certificate
 Every export sale should be covered by insurance. Who provides the coverage
depends on the INCOTERM used.
 Export Credit Insurance
 Marine Insurance

5. Export Credit Insurance
 Export credit insurance (ECI) protects an exporter of products and services
against the risk of non-payment by a foreign buyer. In other words, ECI
significantly reduces the payment risks associated with doing business
internationally by giving the exporter conditional assurance that payment
will be made if the foreign buyer is unable to pay. Simply put, exporters
can protect their foreign receivables against a variety of risks that could
result in non-payment by foreign buyers.
 ECI generally covers commercial risks (such as insolvency of the buyer,
bankruptcy, or protected defaults/slow payment) and certain political risks
(such as war, terrorism, riots, and revolution) that could result in non-
payment. ECI also covers currency inconvertibility, and changes in import
or export regulations.

6. Marine Insurance
 Marine Insurance is a type of insurance that covers cargo losses or damage caused to
ships, cargo vessels, terminals, and any transport in which goods are transferred or
acquired between different points of origin and their final destination.
 Providing protection against transport-related losses, this marine insurance provides a
haven for shipping companies and couriers because it protects them from costly
potential losses while transporting goods by water.
 Despite following laws and safety regulations, transporters can’t control natural
occurrences that might disrupt the cargo or vessel.
 Things like weather hazards, encounters with pirates, and cross border conflicts are very
common in water transportation and the damages associated with these situations can
cause a significant financial hardship for ship owners. This is where a marine insurance
policy comes to the rescue, protecting the interests of shipping corporations and
transporters by providing them with insurance coverage needed to defend against
possible losses.

7. Types of Marian Insurances
 Hull Insurance – offers protection for physical damages to the boat or vessel
along with its operating equipment, including machinery.
 Cargo Insurance – provides coverage for physical damage to cargo that is
conveyed or travelled as part of the shipment process. Depending on the
chosen coverage, some policies offer theft protection or coverage for other
forms of losses besides physical damage.
 Marine Liability Insurance – also called P&I or protection and indemnity, this
coverage offers protection for third-party liabilities that owners and
corporations are exposed to during water operations. It includes coverage for
injuries, illnesses, or even loss of life caused by vessel operation. Medical
expenditures, damage to other vessels and cargo, collision incidents, and
related expenses as a result of quarantine may also be covered.

8. Export Credit Guarantee Corporation
 The Export Credit Guarantee Corporation of India Limited (ECGC) is a
company wholly owned by the Government of India. It provides export
credit insurance support to Indian exporters and is controlled by the
Ministry of Commerce.
 Government of India had initially set up Export Risks Insurance Corporation
(ERIC). It was transformed into Export Credit Guarantee Corporation
Limited and to Export Credit Guarantee Corporation of India. The ECGC
Limited (ECGC) was established on 30 July 1957 with an objective to
provide insurance cover in respect of risks in export trade. ECGC is a
central government undertaking body to provide credit guarantee on the
default of payments by the buyer. It works as an insurance firm who
guarantees export payment, if the buyer defaults in making payment.

9. Functions of ECGC
 Provides a range of credit risk insurance covers to exporters against loss in
export of goods and services.
 Providing export credit guarantees to banks and FI’s to enable exporters
obtain better facilities from them.
 Provides overseas investment insurance to Indian companies investing in
joint ventures abroad in the form of equity or loan.
 Assessment of buyers for the purpose of underwriting
 Preparation of country reports
 International experience to enhance Indian capabilities
 Makes it easy to obtain export finance from banks/financial institutions.

10.  Assists exporters in recovering bad debts
 Information on credit-worthiness of overseas buyers
 Offers insurance protection to exporters against payment risks.
 Provides guidance in export-related activities
 Makes available information on different countries with its own credit
ratings.

11. Procedures with ECGC to cover
insurance
 Once after finalizing the order, the buyer execute a purchase order to the seller
with the terms and conditions as agreed by both.
 The exporter approaches Export Credit Guarantee Corporation to get approval
on the buyer with amount of limit.
 The ECGC with their available contact with overseas network finds out the
credit worthiness of the said buyer and arrives a figure of creditworthiness and
inform the maximum limit of amount can be shipped at any point of time.
 Export Credit Guarantee Corporation collects premium on the amount of
approval and issue insurance policy accordingly.
 The exporter can apply with the ECGC for insurance on shipment wise order as
specific insurance policy, or at lump sum as comprehensive policy.