These pages are intended to provide you with efficient and effective solutions for a variety of frequently asked questions.
These resources were created by the EGE staff to provide you with instructions on some of the more involved aspects of EGE.
What is an FAQ?
The term FAQ is an acronym for Frequently Asked Questions. In most cases, FAQ is a document that contains the most asked questions about a given subject
Who can I contact for more answer?
If after all this, you are still having difficulties finding an answer to your problem or some part of the website just does not make sense to you, please let us know. You can ask questions directly by sending an email to [email protected]. Please include an email address and phone number in the text.
What is Trade Credit Insurance? Why should use it and how does it protect me?
It is a product that insures your accounts receivable and your business activity from the risk of unpaid invoices which may be caused by a variety of risks; political, bankruptcy and plenty more reasons. Since there is always a risk of defaulting on payments, it is always in your best interest to ensure your receivables to secure your position.
Trade Credit Insurance, or Export Credit Insurance, allows you to identify and isolate buyers that are under a risk of defaulting and therefore allows you to refine your debtors list and ensure a steady cash inflow for the duration of your operations. You also get the opportunity of refining your research methods and general KYC guidelines that further ensure a seamless line of operations going forward.
Using trade credit insurance also offers you a more secure and therefore favorable position when applying for financing; with your cash flow properly secured, it would be easier to obtain loan at generally more favorable rates. This further allows you to explore new and untapped markets more fearlessly since you are backed by secured cash flows and unhindered financing.
How is it different from other commercial insurance?
Export Credit insurance is a service to protect intangible risk (cover to nonpayment of buyer’s risks). Other commercial insurance is a service to protect tangible risk which can happen to goods, assets, machines, cars…etc.
Does our company need any export credit insurance?
Yes. When your company is engaged in export trading on credit payment terms namely Documents against Payment (D/P), Documents against Acceptance (D/A) and Open Account (O/A), it is exposed to “non-payment” risks. Unforeseeable political, social and commercial factors can also prevent payments from your buyers to your company.
Being insured by export credit insurance, your company is protected against bad debts risks, enabling you to secure by extending more favorable terms to overseas buyers. Your capability in acquiring trade finance is also enhanced.
What risks are covered by EGE policy?
EGE policy covers non-payment of buyers that might result directly from any of the risks which are as follows:
Commercial risks, political risks, and the loss arising out of resale of the goods in cases such as buyer’s rejection of the good or non-delivery.
Can cover be provided if the seller and buyer are related companies?
In this case EGE does not cover the risk of non- payment resulting from commercial risks. Otherwise, it can cover the risk of non-payment that is resulted from political risks.
Is there any price list from EGE?
There are many variables which affect the determined price, such as country zone risk, credit period, sales turnover, and buyer risk rating, therefor premium rates vary from Policyholder to Policyholder.
What terms of payment are insured by EGE?
EGE ‘s Coverage of Open Account transactions (without banks guarantee), include: Documents against payment (DP), Documents against Acceptance (DA) for tenors up to 180 days for Short term transactions and up to 5 years for Medium terms transactions.
How do I lodge a claim?
You must lodge your claim by filling in a claim form which will be provided to you. You should give all the details and all supporting documents requested in the claim form. Incomplete documentation can seriously delay the settlement of your claim.
When should a claim be submitted?
A claim should be submitted according to the guidelines specified in the policy.
When will I get paid?
Claims are paid:
• In case of commercial risk such as insolvency or bankruptcy of buyer – as soon as practicable
• In other noncommercial cases such as New law applied outside the country which restricted the possibility of transfer of money to the exporter.
How much will I be compensated?
If your amount of loss does not exceed your credit limit, the compensated amount will be the amount of loss multiplied by the percentage of indemnity.
If your amount of loss exceeds your credit limit, the compensation will be the amount of credit limit multiplied by the percentage of indemnity.
Factors effecting your claim.
• Essentially, a credit insurer needs to be assured that:
• Your claim is in relation to an event of loss covered under your Policy.
• You have an appropriate credit limit on the buyer and have declared the shipment.
• You have complied with all the terms and conditions of the Policy.
• And the contracts of sale between the buyer and yourselves have been properly executed by you.
What is the percentage of claim payment?
EGE undertakes to indemnify up to 80% of the losses.
What usual actions for minimizing losses would you suggest taking?
It depends on the circumstances of the case. Generally speaking, in the case of insolvency, it is important that you promptly register the amount the buyer owes you and other detail with his receiver/liquidator/administrator.
In the case of potential default, we suggest that you send a strongly worded letter to the buyer demanding immediate payment. You may also arrange, through your bank, to have the bills protested the buyer if circumstances indicate that this action is worthwhile.
In the case of repudiation, you should first arrange proper storage of and insurance for the goods involved. Then you should send a written demand to the buyer to take delivery of and pay for the goods within a certain time limit. If such action fails, you should look for alternative buyer and hold the original buyer responsible for any losses incurred.
You should keep us promptly informed of your actions.
What is EGE’s methodology for prospective buyer analysis and country risk assessment?
EGE employs a multidisciplinary approach to analyzing prospective buyers, it also has a dynamic country cover attitude which tackles main assessment points on countries. We use a mix of quantitative and qualitative information to properly assess the level of buyer activity; credit information reports allow us preliminary insight into the credit history of prospective buyers.
We have wide coverage over global media providers and news aggregators, as well as insight into in-depth analysis of different industries and their roles in the constitution of the economy. We source our information from credible providers and imbue our own research methodology to properly analyze world countries in terms of macroeconomic trends as well as key industries.
We are also constantly reviewing official government resources to update our databases with the latest dynamics of the political scene in the global economy. We include several key data pertaining to the health of local and international economies that help shape our idea of the risk profile associated with each country and the underlying industries.
Are there countries or markets not covered by EGE?
According to our cover attitude, which undergoes periodic updates, EGE covers around 200 countries all over the world. Countries with high levels of political and/or economic turbulence have an elevated risk profile and therefore may be excluded from our coverage.
Why does EGE refuse or restrict cover on my buyer?
EGE may restrict or refuse cover on a buyer for various reasons and in a varieties of circumstances including but not limited to; the situation where information on the buyer is not sufficient; when our commitments on the buyer are full; where there is a winding-up or bankruptcy petition filed against the buyer; or where the trading conditions such as the political or economic stability of the buyer’s country have changed.
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