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Export credit insurance and export finance

Export credit insurance protects companies from losses due to non-payment for commercial and political reasons. The Federal Government of Germany gives cover in the form of an export credit guarantee to private buyers. The following risks are insured: Commercial risks • Loss of receivables due to non-payment after a certain period (protracted default) • Loss of receivables due to the bankruptcy of the buyer, a composition settlement in or out of court, an unsuccessful execution or suspension of payments by the buyer Political risks • Bad debt losses due to legislative or administrative measures, war, civil unrest or revolution abroad • Losses due to non-conversion and non-transfer of amounts paid by the debtor in local currency due to restrictions in the international payment system • Loss of the right to receive payment due to frustration of contract for political reasons • The loss of goods before the risk has passed to the foreign buyer due to political circumstances (e.g., the goods were confiscated, destroyed etc. before reaching the buyer) Medium term export credits are regarded as those with an agreed payment term in excess of 24 months and up to five years. Transactions with a credit period of more than 12 months generally involve an advance payment of 15 % of the order value and the payment of the remaining 85 % in at least half-yearly instalments. Export Credit Guarantees can be assigned to financing banks. Non-German banks, especially those located in European Union countries, are also eligible. In case of a claim - there is a waiting period of 6 months after due date (protracted default) - the indemnification will be transferred directly to the bank. The exporter retains the uninsured percentage (usually 5%) for his own account.