ECGC

ECGC & Export
Credit Risks
ECGC BACKGROUND
•Established in 1957
•Administrative control of Ministry
of Commerce & Industry “ TO SUPPORT THE INDIAN EXPORT
•Authorized capital 5000 crs INDUSTRY BY PROVIDING COST

•Head Office at Mumbai & Regional EFFECTIVE INSURANCE AND TRADE
RELATED SERVICES TO MEET THE
Offices & Branch Offices at 58
NEEDS OF THE INDIAN EXPORT
export centers in India
MARKET.”
•Board headed by Chairman and
Managing director with 13
Directors Total premium – 1106.64 Crs
Claim Paid – 687.20 Crs
•Registered with IRDA Recovery made - 109.68 Crs
•Iaaa rated by ICRA for claim paying * As on 31/03/2022 for FY 2021 - 2022
ability
•Member of Berne Union
EXPORT INSURANCE
Goods Receivables
Loss or Damage Exchange Risk Payment Risk
Hedging by Credit
Marine
Authorized Insurance
Insurance
Dealers
What is Trade Credit Insurance?
Trade credit insurance protects a company’s commercial

accounts receivable from unexpected losses resulting from
insolvency or "non/slow-payment" by its buyers and from
political events that obstruct payment.
Like all insurance, credit insurance involves some aspect of risk

sharing rather than 100% risk lay-off
Terms of Payments in Exports
Advance Payment
Letter of Credit
Cash Against Documents (CAD)
Documents Against Acceptance

Terms of Payments & Risks Mapping
FAILURE TO TAKE
DELIVERY
DP INSOLVENCY OF BUYER
NON-PAYMENT
DA
PAYMENT DELAY/
PART PAYMENT
TAKES DELIVERY WITHOUT
OD PAYMENT
DISCREPANCIES RAISED
LC DEFAULT OF LC OPENING BANK
INSOLVENCY OF
LC OPENING BANK
ECGC FINANCIAL PERFORMANCE
Financial Performance in the last 5 FY

1400
1283
1240 1247
1200
1107
1075 1062
1036
1013
1000
800
687
600
409
400
200
0
2017-2018 2018-2019 2019-2020 2020-2021 2021-2022
Premium Claim Rs in Crores

Why Credit Insurance?
Risk Protection
• Prevents disrupting losses to one of Sales Expansion
the company’s largest, unprotected
assets • Expand Sales into Riskier or
• Reduction of Risk of Key Account New Markets
concentration levels • Grow with Existing Accounts
• Caps Exposure to Bad Debt Loss • Enhance a Customer
Relationship
Other Advantages
• Working Capital requirements

• Credit Risk assessment of buyer and country risk assessment
• Provides a structure and discipline for credit decision making
• Gain leverage over high risk accounts by using underwriter’s clout and
resources
ECGC Business Profile
ECGC
Exporters Banks/FIs
Short Term(ST) Short Term, Medium & Long Term

Medium and Long
Term (M&LT)
Fund based Non fund Based

1. Declaration Based 1. Specific Contracts
Policies Policies
2.Exposure Based 2.Specific Shipments PC / PS Surety Cover
Policies Policies
3.Specific Shipments 3. Specific Services
Policy Policies
4.Consignment Special schemes
4. Construction work
Exports Policies 1. Lines of Credit
Policy
5. ITES Policies 2. Buyer’s Credit
6. Factoring Overseas Investment
Insurance Policy
5
ECGC PRODUCTS
•Providing Credit Insurance

• Protection covers to exporters against
Policies against default loss in export of goods &
by the buyer services
• Protection •Providing Export Credit

against default Insurance to banks & FI’s to
ECIB
by the enable exporters obtain
Exporter
better facilities from them
•Providing Overseas
•Finance, credit
Factoring Investment Insurance to
risk cover on buyer, Exporters - Indian
collection of bills Entrepreneurs in Overseas
and maintaining of Ventures (Equity/Loans)
sales ledger
Risks Covered by ECGC
CREDIT RISK
Political Commercial
Risk Risk
Country Buyer Bank

Short Term Comprehensive Risk Policy Schemes
Declaration Based
• Exports (Turnover) Policy – ETP
• Shipments (Comprehensive) Risks Policy
• Small Exporters Policy
Exposure Based
• Multi Buyer Exposure Policy – MBEP & Single buyer
exposure policy
Tailor Made cover-Customer specific cover
12
Risks Covered by ECGC
Commercial Political
Risks Not Covered
Risk Risk
War, Civil War,
Insolvency Internal
disturbances ×Risks of loss due to
commercial or quality disputes
Protracted
Exchange
transfer ×Insolvency or default of any
Default blockage agent of the exporter or of the
collecting bank
Non Diversion of ×Loss or damage to the
Acceptance of voyage goods which can be covered
goods
by general insurers
Default of the Import ban ×Exchange Rate Fluctuation
LC opening
bank
restrictions etc ×Failure of the exporter to
fulfil the terms of the contract
Insolvency of or negligence on his part
the LC opening
bank
Country underwriting
Open Cover Countries Restricted Cover Countries - I
Usually those countries where the

Cover with No Restrictions political and/or economic conditions
Cover is offered usually on normal terms and are relatively deteriorating or have
conditions i.e. 90% cover, 4 months waiting deteriorated and likelihood of
period for ascertainment of loss and payment delays or non-payment are
settlement of claims, etc. imminent or have occurred
Currently ECGC places 217 countries under Permits selection of risks ECGC
Open Cover wishes to underwrite
Restricted Cover Countries – II
Category 2: Countries where Specific Approval will be given on case to case basis on merits
Valid for six months
Normal waiting Period of 4 months
Only 11 countries under this category:- North Korea, South Sudan, Sudan, Syria ,Palestine
Venezuela, Afghanistan, Eritrea, Yemen, Western Sahara , Zimbabwe
Role of Buyer risk underwriting
• Credit risk insurance underwriting is the process of risk assessment
of buyer and evaluation of the proposal in terms of nature of
underlying transactions, insurable interest, selection of risk-claim
premium experience for sector, commodity etc.
• Guidelines given in ‘Underwriting policy’ of the company is followed

which is in line with corporate strategy, exposure norms, risk
appetite, exceptions, interventions etc
• Buyer underwriting is an important tool to improve the claim

premium ratio and expense ratio, based on the :
– Country risk rating and tenor of transaction-linked to premium rate
– Amount of suitable exposure on the buyer based on solvency , liquidity position

and past payment experience with the buyer.
– Quick and adequate amount of cover to increase the premium earnings,

customized cover etc
– Improves the risk management of exporters – diversification to avoid risk

concentration etc
Buyer risk underwriting
• Collecting adequate information about the buyer to identify the
buyer correctly and its activity status by obtaining the credit report
(latest investigated report) from the empaneled credit rating agency
(members of www.BIIA.org, FEDIC,FEBIS etc) manually/ thru API
(application program interface) feed.
• Buyer’s creditworthiness assessment is based on the detailed
analysis of :
 Buyer’s country risk classification , economic & industry trend
 Buyer’s ownership structure, age & its business ability
 Buyers financial strength , sustainability and market position
 Past payment pattern and our risk value experience and its
repayment capacity
 commodity, terms of payment & amount of exposure to be
covered, exporter’s track record and payment realization
experience.Risk appetite of Insurer etc.
Process of fixing Overall limit
• For quick and consistent underwriting approach, credit risk

assessment is done thru our robust Scorecard model , on
the basis of financial and non-financial factors of the buyer.
Scorecard gives credit score , rating & maximum exposure
amount to each buyer.
• Scorecard (automatic preparation) is created based on the
infographic of the buyer , rating of agency, financials
standing of buyer, our risk value experience with buyer &
commodity, Industry status etc , suggesting maximum
exposure amount based on the score card model (3-4
types) -.
• Limits are also fixed on the buyer beyond the scorecard
suggested overall limit.
STANDARD POLICY (SCR)
Exporter whose annual export turnover is more than 500 lakhs is

eligible for this policy. This is a standard whole turnover policy
wherein all shipments are required to be covered under the policy.
Important Concept
Period of Policy: 12 Months
 WHOLETURNOVER-PRINCIPLE
 OPTIONS FOR EXCLUSION
Exclusion Permitted: Exports to Associates  CO-INSURANCE
Shipments backed by Letters of Credits  ADVANCE PREMIUM AS PER IRDA
GUIDELINES
 MAXIMUM LIABILITY
Risks covered:  CREDIT LIMIT
Commercial Risk/Buyer Risk  DISCRETIONS ALLOWED
Polictical Risk L/C Opening bank Risk  REPORT OF DEFAULT
 PRIOR APPROVAL FOR RC
Percentage of Cover: 90 % COUNTRIES

Minimum Premium : Rs 10,000 shall be adjusted towards premiums
falling due on the shipments effected under the policy and its non-
refundable
Thank You
Niraj Gupta
email:[email protected] &
[email protected]
web: www.ecgc.in

ECGC

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ECGC & Export

•Authorized capital 5000 crs INDUSTRY BY PROVIDING COST

Loss or Damage Exchange Risk Payment Risk

Trade credit insurance protects a company’s commercial

Like all insurance, credit insurance involves some aspect of risk

Cash Against Documents (CAD)

Documents Against Acceptance

LC DEFAULT OF LC OPENING BANK

Financial Performance in the last 5 FY

Premium Claim Rs in Crores

• Working Capital requirements

Short Term(ST) Short Term, Medium & Long Term

Fund based Non fund Based

•Providing Credit Insurance

• Protection •Providing Export Credit

Country Buyer Bank

Open Cover Countries Restricted Cover Countries - I

Usually those countries where the

Restricted Cover Countries – II

• Guidelines given in ‘Underwriting policy’ of the company is followed

• Buyer underwriting is an important tool to improve the claim

– Amount of suitable exposure on the buyer based on solvency , liquidity position

– Quick and adequate amount of cover to increase the premium earnings,

– Improves the risk management of exporters – diversification to avoid risk

• For quick and consistent underwriting approach, credit risk

Exporter whose annual export turnover is more than 500 lakhs is

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