International Trade Resources Podcast Options for Credit Risk Insurance
Today on the International Trade Resources Podcast, our host Kim Kirkendall is joined by Andrew Jeanblanc to discuss credit risk insurance. Andrew has spent the last eight years in trade finance and international credit risk insurance. Currently he’s the business development manager broker for a Risk Insurance company which specializes in private trade risk and credit risk insurance. He’s also worked in many business development and project management roles, as well as spent some time in China.
First, Kim and Andrew dive into what credit risk is and why companies may need outside help in order to mitigate it. Credit risk insurance helps companies minimize risk undertaken when they export and sell overseas. Primary risks companies may encounter are non-payment by foreign companies, foreign war, political violence, cancellation of import license, and more.
Andrew breaks down what the requirements are for EXIM bank to provide credit insurance and how that compares to a private insurer. Ultimately, when determining which policy type to go with, the insurance company will have to determine what exactly they're covering. Companies should expect a deep dive into their business and the transaction. If a company is new to export, that's when Andrew would steer them more towards EXIM (if they qualify). EXIM makes more sense for companies with newer customer relationships and/or new to international.
Finally, Kim and Andrew list some of the benefits and limitations of EXIM insurance. Companies get 95% indemnity with 5% co-insurance coverage, whereas in private markets you’d usually get 90% indemnity with 10% co-insurance. Companies may not qualify for EXIM if they’re selling products that aren't US made, products that have military use, or are selling to the military, as those are some of other limitations of EXIM insurance.
Learn all this and more about credit risk insurance in this information-packed episode!
Things you’ll learn
- Start with EXIM bank if you can due to lower cost and only pay when you use it.
- Private insurers can be more flexible but they will charge more for the flexibility.
- You still need a solid sales order with reliable customers and reasonable payment terms for anyone to finance the sale.
Episode Sponsors:
Acclime China:
Corporate Services and full Accounting/CPA/Tax for China.
Website: www.intltraderesources.com
Email: intltradepodcast@gmail.com
Disclaimer: The content of this podcast is for informational purposes only and does not constitute legal or commercial advice. We provide no guarantee for the accuracy of the information provided. Reproduction or transmission of this podcast is strictly prohibited.