Insurance for long-term export transactions

The services for insuring export transactions with a payment term exceeding two years are the supplier’s credit insurance and the buyer’s credit insurance.

These services are designed for exporters who sell capital goods or durable goods (such as machinery, equipment, plant equipment) or provide large-scale services to a foreign buyer (such as significant IT-development), also, to financers participating in such transactions.

The exporters conclude the supplier’s credit insurance by themselves. This service can be used as a guarantee when financing an export contract and when an export transaction is financed with an export loan issued by KredEx.

Buyer’s credit insurance is designed for a financer, who finances the transaction of an Estonian exporter by granting a loan to a foreign buyer. The financer using this service shall pay the exporter for the goods or services; the buyer, however, shall pay the financer under a credit contract. A credit contract is understood as a loan or another agreement, also a letter of credit, which commits the buyer to make payments to the financer within a payment term of at least two years.

Both, for the supplier’s credit as well as buyer’s credit, the insurance covers the risk that the foreign buyer is failing or becomes insolvent (e.g. goes bankrupt).

The supplier’s and buyer’s credit insurance is a state export guarantee within the meaning of the State Export Guarantee Act. The terms and conditions of insurance and the terms and conditions of an export transaction are based on the Organisation for Economic Cooperation and Development (OECD) agreement on the provision of state export guarantees.

• The payment term granted to buyers is up to 5 years for a debtor in a High Income OECD Country and up to 10 years for a debtor located elsewhere. High Income OECD Countries are determined by the World Bank once a year.
• Insurance cover is up to 95% of the value of export credit.
• Insurance also covers the interest under an export or credit contract, calculated for up to 120 days.
• The buyer’s payment obligation is insured within up to 85% of the value of export contract (the buyer must make a prepayment within at least 15%). The insurance premium may be included in the value of the export contract.
• The payment schedule of an export or credit contract, under which the buyer makes the payments, must provide for the payment of the principal amount in equal instalments, at least two principal and interest payments a year and the payment of the first instalment at the latest within six months after delivery of the goods to the buyer or complete provision of the service.
• We pay the damages which your company incurs when the buyer is unable to make the scheduled payments.

• Example (case study)
• Also see terms of the export loan
• OECD agreement
• Combating bribery in business transactions

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