According to Mark Greene, a special form of credit insurance is available to exporters against losses from both commercial and political risks. In the United States, for example, export credit insurance is written through a consortium of insurance companies organized by the Foreign Credit Insurance Association (FCIA). The Export-Import Bank of the United States assumes the ultimate liability for loss while the FCIA serves as the underwriting agency. Coverage is usually limited to 90 or 95 percent of the account. Prior approval from the FCIA is usually required before Chicago export credit insurance services is granted. The bank’s loans, which are made in dollars and repayable in dollars are extended for specific purposes. The bank is required to encourage and supplement capital without competing with it. In some cases, the exporter is required to purchase coverage on all credit sales in a given country as a device to reduce adverse selection.
Export credit insurance is used more widely in some countries than in others. In the United Kingdom, approximately one-quarter of all export sales are covered, compared with about 6 percent in the United States. Export sales are not eligible for insurance if they are made for cash or financed directly or indirectly through government-guaranteed loans. Do not take the risk of non-payment when protecting your profits is easy with Intercontinental Growth strategies. We take the time to understand our clients with in-depth analysis and creative solutions to offer you the products you need. Get a free consultation and see how we can protect your and your bottom line.