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Insurance products for small and medium-sized enterprises

Insurance products for small and medium-sized enterprises

Through the products of the insurance division, the risks of non-payment of receivables from the side of foreign buyers that are linked with the export credits are prevented. Amendment of the Act on EXIMBANKA SR also enables insurance of domestic receivables.

Reasons for insurance of receivables

Insurance of a receivable is a very advantageous way of securing them also for other reasons:

  • enables the transfer from a letter of credit, documentary collection or a bank guarantee for smooth payment
  • many clients use the insurance for the purpose of obtaining financial resources, because an insured receivable is considered to be a certain form of collateral

Loan insurance is very much approved also when penetrating new markets. EXIMBANKA SR is a partner of the French Crédit Alliance and together with a network of other agencies around the world it is capable of securing:

  • very quality evaluation of buyers, including their payment ethic
  • in the price of the insurance is also recovery of a receivable abroad, and EXIMBANKA SR uses a network of quality collection agencies
  • with paying out of an insurance claim EXIMBANKA SR becomes the owner of the unpaid receivable, thus in this way the financial indicators of the insured is improved

The division of credit risks

  • commercial risks - are caused by the bad financial situation, insolvency or bankruptcy of the buyer or its unwillingness to observe its contractual payment obligations. The credit standing of each buyer is assesses on the basis of data of a financial and non-financial character. Its ability to pay off liabilities is subsequently determined
  • political risks - are caused by a bad economic, administration and political situation of the foreign buyer’s state. These are events which have from the viewpoint of the buyer the character of a higher power (force majeure), such as war, civil war, revolution, rebellion, a coup d’etat, natural disasters, terrorism and other unrest, which prevents the buyer from making the payment

A component of political risks is also transfer risk, when a foreign buyer gives an order for payment at a bank and deposits the money in local currency but with respect to the insufficient convertibility of the currency or restrictive measures of the state (an embargo, moratorium) it is not possible to transfer the convertible currency to the account of the supplier.

Another category is the revoking of an export or production license or other permits necessary to carry out the signed contract. These are such cases when a foreign contract and the export associated with it was from the technical and business side in line with all required matters, customs and regulations of international trade and interferance from the state in the area of license came in the course of fulfilling the contract.

A case when an export contract is signed with a public or state buyer is considered a so-called pure political risk.

Sometimes damage may occur even in periods before fulfilment of the contract, so-called production risk. In such cases, particularly with mid-term contracts related to investment units and goods for special order, damage may be caused by withdrawal from the contract by a public buyer, non-observance of contractual conditions by a private buyer, and this non-observance was caused by administrative measures of the state, the start of a war conflict, a revolution or rebellion in the buyer’s state.

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