Export Credit Insurance

Concept

Export credit insurance protects exporting companies against the risk that foreign buyers are unable to meet their payment obligations for goods delivered or services rendered, due to economic (commercial) or political circumstances.

Private versus State Cover

Alongside private credit insurers, Germany’s state-mandated institutions offer export guarantees under the so-called Hermes cover scheme, which is used in particular for transactions with elevated political risk or in markets that private insurers cannot cover.

Covered Risks

Typically covered risks include the insolvency or payment default of private buyers (commercial risk) as well as non-payment resulting from war, expropriation, transfer restrictions, or other sovereign measures in the buyer’s country (political risk).

Specialised Form: Capital Goods and Leasing Credit Insurance

For the export of long-lived capital goods and for cross-border leasing transactions, credit insurers offer a specialised variant, capital goods credit insurance (or leasing credit insurance): it accounts for the significantly longer payment terms and contract durations typical of such transactions compared with conventional trade credit insurance, and protects the exporter or lessor against the loss of purchase price or lease instalments spread over several years.