IMPORTANT POINTS FOR AN EXPORTER TO CONSIDER BEFORE AVAILING CREDIT INSURANCE from ECGC i.e Export Credit Guarantee Corporation of India
Disclaimer: This blog is not affiliated with any credit insurance companies. We strongly urge you to follow your actual policy compliance. This blog site is only for general information purposes which we acquired from our years of experience in the industry. We wrote this blog to help exporters by providing information on what they should do and shouldn't do when it comes to settling claims. Knowing this beforehand can help make the process go more smoothly for them.
1. If payment for any of your shipments gets blocked, delayed, or lost due to the commercial and political risks mentioned in the Insurance policy, you will be able to claim a major portion of the loss from the Corporation under the Policy. i.e maximum of up to 95% of your invoice value.
2. Apart from giving protection against unpredictable losses, the Policy may also help you in expanding your export business by adopting a dynamic approach towards accepting new buyers and granting them credit facilities.
3. You should; however, note that these benefits will not accrue to you merely because you have obtained an insurance policy. To get the benefits of the Insurance Policy, it is essential that you comply with the various terms and conditions of the policy throughout the policy period.
4. You must read the policy provided by the corporation which explains how to keep the policy in good order and get the best out of it. You may ask us for a copy of a brochure if you have not already obtained one.
5. It is also suggested that you peruse of the policy bond itself.
6. When it comes to credit limits on buyers, it is essential that you get a suitable Credit Limit approved by the Corporation on each of the buyers unless your requirements are met as per the policy. Must Watch - https://www.youtube.com/watch?v=cEhTkDKpX9Y
7. In the absence of such Credit Limits. . . the Corporation will not admit any claim arising from any of the commercial risks you're having paid the premium for covering comprehensive risks on such shipments. Applications for Credit Limits are to be made on appropriate forms.
8. If you want a Credit Limit to be increased . . . you have to use the appropriate Form which can be obtained from the prescribed office.
9. When it comes to the declaration of shipments and payment of premium you are required to declare all shipments made by you during the policy period on a monthly basis. Declaration of shipments made in a calendar month has to be submitted by the 15th day of the next month.
10. The amount of Minimum Premium paid by you is non-refundable but is adjustable against the premium payable on the shipments made, on receipt of the shipment declarations. In compliance with relevant rules, please ensure that sufficient Premium deposit in advance is maintained with the insurer based on your turnover projection at all times, under the Policy to cover the premium that will become payable for shipments to be affected. In case of quarterly or annual installment of premium payment, you will be entitled to a discount in the amount payable as premium at the rate of 1% for quarterly installment and 5% for annual installment and you can pay premium net of the discount applied to you.
11. The method of premium payable for the covers extended by the Credit Insurance companies has to be brought in line with what has been prescribed in the Insurance regulations You will notice that under all your insurance policies, whether it is for your car or for your inventories, the premium is being paid by you before the risk coverage commences.
12. It may be noted that timely declaration of shipments and availability of adequate premiums in your account with the Corporation is an essential requirement of the Policy.
13. In case of any delay in declaring the shipments and or payment of the premium due thereon, the same is accepted on the principle of the Whole turnover whereby you are required to declare all the shipments and also pay the premium for the purpose of keeping the Policy in good order. It may be noted that mere acceptance of delayed declaration and/or premium is not deemed to be automatically condoned. In case of a claim arising out of any of the shipments so declared, the same will be subject to the terms and conditions of the Policy.
14. You also need to submit monthly declarations of all export activities as given in the policy rules.
15. If the documents/goods have not been accepted by the buyer, taking action to safeguard the goods and to resale them to an alternate buyer after giving notice to the original buyer, prior approval of the Corporation should be taken if the resale is affected at a discount.
16. You should need to make arrangements to bring the goods back to India, with the prior approval of the Corporation, if resale is not possible.
17. It is also recommended to the exporter from making any further shipments to the buyer until he has made the payment for the bill in default.
18. In respect of the Small Exporter's Policy the exporters will be required to payments remaining overdue by more than 60 days from the due date.
19. You should keep in mind the filing of claims and waiting period for settlement of claims is generally 2 months but it may take sufficient time to analyze your claim and deposit funds into your bank account.
20. Claim to be filed in 360 days from the due date of payment or 540 days from the expiry of the policy whichever is earlier.
21. Also remember that the waiting period for claims is two months under the SEP policy.
22. When it comes to shipments to government buyers: where shipments are made to an overseas government or against a contract the performance of which is guaranteed by an overseas government, you can get cover for political risks only.
Other Important points an Indian start-up should consider before availing credit insurance claim from ECGC
A trader has to follow these Guidelines to get ECGC Claim
1. Your Export Shipment Data has to be submitted to ECGC within 15 Days after the date of shipment
2. If you are doing the Direct Dispatch of Documents to the Buyer, then a written permit from the bank is required, Else, there should be always Bank to Bank Transactions. Must Watch - https://www.youtube.com/watch?v=qr66QGWG2as
3. Exporter Should attach the "Bills of Exchange" while submitting the Documentation set to the bank.
4. Any Fraud / Non-Acceptance/ Non-Clearance or Non-Payment must be immediately reported to ECGC earliest.
5. Exporter must always do the Pre-Inspection of goods at the loading port with proper Product photos and videos. So if a buyer arises Quality issues Exporter can safeguard its interest.
6. For Quality compliance, an instant survey is required, surveys could be arranged by Buyer's CHA or Insurance Office in Buyer's country. From it, the buyer can analyze where he can apply for a claim. Insurance co. or Shipping line claim department. If the loss is caused due to container/temperature or negligence, then for it there are special claim departments of the shipping line and one must visit them to apply for the claim. [THIS PROCESS HAS TO BE DONE BY THE BUYER FOR RECOVERY FROM AGENCIES & THE BUYER HAS TO PAY MONEY TO EXPORTS ON TIME]
7. Always inform the buyer to take photos/videos at the time of unloading or opening the seal of the container in a foreign country. It could help to get claims for agencies faster. Such a clause could be added to the contract https://youtu.be/y-BqmKR-21k [Must Must Must Watch]
8. Exporters should always remain confident in their Product's Quality. Always show your positivity to ECGC in your Products Supplied to Buyers. Show the Inspection Reports to them with Product images, videos, etc.
9. Always Stay in Touch with ECGC officials or managers. Communicate with them via email and ask for more guidance based on your country, Products, and deals.
10. The amount of Minimum Premium paid by you is non-refundable but is adjustable against the premium payable on the shipments made, on receipt of the shipment declarations. In compliance with IRDA regulations, please ensure that sufficient Premium deposit in advance is maintained with ECGC based on your turnover projection, at all times, under the Policy to cover the premium that will become payable for shipments to be affected. In case of quarterly or annual installment of premium payment, you will be entitled to a discount in the amount payable as premium at the rate of 1% for quarterly installment and 5% for annual installment and you can pay premium net of the discount applied to you.
11. The method of premium payable for the covers extended by ECGC has to be brought in a line with what has been prescribed in the Insurance Act, of 1938. You will notice that under all your insurance policies, whether it is for your car or for your inventories, the premium is being paid by you before the risk coverage commences.
13. The minimum premium paid by you will be adjusted against the premium payable on the declarations for the initial period of the Policy and it shall be your responsibility to ensure that an adequate amount is available in the deposit account. The declarations submitted will be adjusted in chronological order as first in and first out and if the minimum premium is exhausted and there are shipments for which premium has to be remitted, you shall forthwith remit the same upon advice from the Corporation.
14. It may be noted that the nonavailability of adequate premium in your account to cover the shipments elected and declared to the Corporation and nonreceipt of shortage of premium due to a demand made by the Corporation will constitute noncompliance with the terms and conditions of the Policy and it will have a bearing on the claim, if any, even in respect of a shipment for which premium is paid to the Corporation. Please note that premium is payable on all shipments made by you (except those which have been excluded from the purview of the policy) without any omission and that a 'Nil' declaration should be sent if no shipment has been made by you during the period of the declaration.
15. We can personally and professionally consult you for your Credit Insurance Claim, you can email your case to barai@exportbooster.in or call / Whatsapp us at +91 8128111191 for all help...