How does ECGC protect exporters?
Good day everyone,
Today we will be discussing the Export Credit Guarantee Corporation (ECGC) and how they protect exporters. Here are 10 key points to keep in mind:
ECGC is a central government undertaking body that provides credit guarantee on the default of payments by buyers.
ECGC works as an insurance firm, guaranteeing export payment if the buyer defaults in making payment.
To cover insurance with ECGC, the buyer executes a purchase order to the seller with the terms and conditions agreed upon by both parties.
The purchase order should contain full details of the buyer and their bank account details.
The exporter then approaches ECGC to get approval on the buyer with the amount of limit.
ECGC, with their overseas network, finds out the creditworthiness of the said buyer and informs the maximum limit of the amount that can be shipped at any point in time.
ECGC collects premium on the amount of approval and issues an insurance policy accordingly.
An exporter can apply with ECGC for insurance on a shipment-wise order as a specific insurance policy or as a lump sum as a comprehensive policy.
If an exporter obtains a specific policy, the contract of insurance is only for that particular shipment, and the premium payment is only for that shipment.
If an exporter prefers to obtain a comprehensive policy against any buyer, they can get approval from ECGC for the amount of creditworthiness of the said buyer.
That's all for today.