People have been trading since the dawn of time. Early traders found ways to spread the risk of losing cargo whether it was using multiple vessels to transport goods or adhering to codes of restitution enacted by ancient kings. According to Wikipedia, maritime loans were made in ancient Athens which advanced money for voyages with repayment being cancelled if the ship was lost. Rates for the loans differed according to safe or dangerous times of year. Maritime insurance contracts were widespread in 15th century Genoa, with premiums that varied with risk.
An early version of Starbucks led to the formation of one of the most recognizable names in corporate history. In the 1680’s Edward Lloyd opened a coffee house in London that quickly became a popular haunt of merchants, ship owners and ship’s captains, and was also a reliable source for the latest shipping news. I’m fairly certain they didn’t have lattes or frappes, but the informal exchange of information between those with ships and those willing to underwrite voyages led to an established insurance market, and Lloyd’s of London was born.
Given this rich history, EXIM Bank is a relative newcomer to the scene. Founded in 1934 as the Export-Import Bank of Washington, the agency’s stated goal was, “to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof." In their book The Market, the State, and the Export-Import Bank of the United States, William Becker and William McClenahan relate that the Bank’s first transaction was “a 3.8 million dollar loan to Cuba in 1935 for the purchase of silver ingots.” In 1945 the Bank became an independent agency and in 1968 the name was changed to the Export-Import Bank of the United States.
EXIM exists to support American jobs by facilitating the export of U.S. goods and services. When the private sector is unable to help, EXIM Bank provides small businesses with the tools they need to compete in global marketplaces including access to working capital, and, wait for it, trade insurance, also known as export credit insurance.
Export credit insurance from EXIM Bank mitigates risk by insuring up to 95 percent of foreign receivables, giving exporters the peace of mind to enter new markets and the competitive edge to win business overseas.
Google “history of insurance” to learn more about the early days of trade insurance. Check out the EXIM Bank 2015 Annual Report for details on small business transactions (EXIM Bank Annual Report) 2015 and download our export credit insurance ebook to learn how to protect your company’s assets.