It’s no secret that exporting comes with many risks—both commercial and political. In most cases, Export Credit Insurance (ECI) is available to mitigate those risks. ECI is a valuable tool for international trade, but some exporters are hesitant to acquire a policy due to different myths and misconceptions about it. This can eventually lead to its underutilization or misinterpretation. Let’s debunk some of those myths and misconceptions.
- Export Credit Insurance is only for large exporters.
Businesses of any size can benefit from export credit insurance. In fact, in 2024, around 86% of EXIM’s transactions supported small businesses. Not only does ECI mitigate risk, but it also levels the playing field so companies can remain competitive within their respective industries. - It's too expensive.
Depending on the exporter’s needs, an EXIM ECI policy can start at as low as $0.55 for every $100 of the invoice value. That means for a $10,000 shipment, the premium would be $55.1 No shipment is too small and, with most policies, the exporter only pays when they ship to ensure the premium they’re paying isn’t wasted. - It's too difficult to manage.
While policies can be detailed, many insurers offer user-friendly platforms that exporters can use to manage their policies. Through these platforms, they can file a claim, pay a premium, report a shipment, and more. EXIM’s platform, EXIM Online (EOL), supports various trade finance products, including insurance. Some insurers also have dedicated account managers and brokers to help manage the process.
- It covers all types of losses.
Export credit insurance covers commercial risks like insolvency, bankruptcy, and protracted default. It also covers political risks like war, revolution, and currency transfer risk. However, it does not cover disputes with the buyer or physical loss or damage to the product.
- It guarantees payment no matter what.
If an exporter encounters a covered commercial or political risk, they should file a claim within the designated timeframe (usually when a payment is 90 days past due) and provide the buyer obligation documents to support it. Claims can be denied if the exporter fails to meet policy conditions and does not follow the claims process. Export credit insurance is not a blanket guarantee.
- It's only useful after a loss.
Beyond protection against nonpayment, there are other benefits export credit insurance provides. ECI can also allow an exporter to secure better financing because lenders are more willing to lend against insured receivables, negotiate on open account terms with buyers, and expand into riskier markets.
- It only covers tangible goods.
While physical goods represent the bulk of exports, services can be exported too. In fact, demand for services is high because they’re often delivered digitally making them scalable and adaptable. Some service exports include consulting, education, software, and financial services. Export credit insurance covers these types of exports as well.
To learn more about Export Credit Insurance or other trade finance solutions, click here to schedule a free consultation with an EXIM trade finance specialist.
1 To understand your exact cost, contact a trade finance specialist today.