Insurance of Medium- and Long-term Export Supplier Credit Covering Default Risk
C - SMEsInsurance of Medium- and Long-term Export Supplier Credit Covering Default Risk
Short description of insurance product and contacts
Sole trader Jan Kladívko comes home from an exhibition in Azerbaijan with the success of having found a new customer wishing to purchase nails and other materials for 20 million crowns, provided that there is a 30-month payment window for goods supplied. While this is a huge triumph for Mr Kladívko, it comes with risks attached. What if the new customer doesn’t pay for the nails? For Czech sole traders, a twenty-million-crown default could put them out of business. Because he is a sensible type, he takes the contract he has signed with the importer to EGAP. EGAP requires an upfront payment of at least 15% of the total value of the export from the Ukrainian importer. EGAP runs a solvency test on the Ukrainian importer and, if the result is favourable, enters into an insurance contract with Mr Kladívko. If the importer pays on time, everything is all right and the insurance contract ends. However, if the importer defaults, Mr Kladívko receives his money from EGAP instead.
The export supplier's credit is a credit provided by the exporter to the importer (foreign entity) in the form of deferral of payment for the delivered goods or services (export claim).
Podmínky pojištění se řídí pravidly Konsensu OECD. The maturity of the middle-term and long-term export supplier's credit (export claim) is longer than 2 years and the importer shall pay in advance (advance payment) minimally 15 % of the total export value (price agreed in the export contract). The export supplier's credit has not a character of a bank credit. The insured entity is directly the exporter against the risk that the importer does not pay in the due date properly the whole owing sum, i.e. the price for the delivered goods and services (export claim).
Ing. Jan Dubec, Director of Acquisition and Suppliers Credit Insurance Department +420 222 842 328 +420 222 844 130 firstname.lastname@example.org
Basic Conditions of C - SMSe Insurance
The maximum credit amount is 85% of the total value of the export1
The insured credit/receivable is payable in 2 years or longer, up to a maximum of 5 years
The maximum amount of the credit/receivable is CZK 40,000,000
The evaluation of export influence on the life and social environment and non-applying international sanctions
The exporter (unless a foreign company) is an exporter meeting the definition set out in Act No. 58/1995
The exporter meets the criteria for SMEs in accordance with Annex I to Commission Regulation (EC) No. 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in the application of Articles 87 and 88 of the Treaty (General Block Exemption Regulation)
The exporter is not the subject of criminal prosecution, and is not a liable party in the enforcement of a ruling, in enforcement proceedings or in insolvency proceedings
The debtor (importer) and the exporter are not interlinked economically or financially
The export, the country of destination of the export, and the entities involved are not subject to international sanctions
The share of the value of supplies originating in the Czech Republic in the export value is more than 50%
The share of local costs is not more than 15% or, in exceptional cases, 30% of the Export Contract Value2
The insurance of credit or an account receivable linked to agricultural products listed in Annex 1 to the Agreement on Agriculture, constituting part of the Agreement Establishing the World Trade Organisation (WTO), the maturity of which must not be more than 18 months (from the starting point of credit to the contractual final maturity date)
1 The price agreed in the export contract
2 Export Contract Value as per OECD Consensus represents the value of supplies from the Czech Republic and the third countries, i.e. the value of export contract decreased by the value of local supplies i.e."Local Costs"