Export Credit Insurance - Explained
What is Export Credit Insurance?
Written by J. Mance Gordon
Updated at April 21st, 2024
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What is Export Credit Insurance?
Export Credit Insurance (ECI) mitigates the payment risk associated with foreign trade. ECI guarantees payment on commodities exported to foreign country and thus protects the exporter against non-payment.
How is Export Credit Insurance Used?
The Export Credit Insurance or ECI mitigates payment risk associated with international business. More specifically, it ensures and encourages exporters by giving conditional assurance of payment in case of nonpayment by foreign buyers. The Export Credit Insurance covers broad categories of risks. For instance, the ECI insure exporters against commercial risk (default, bankruptcy, and insolvency of the buyer) and political risk (including war, revolution, terrorism etc.). The Export Credit Insurance also covers currency risk and import and export regulations that may result in losses.