Export Insurance Beyond Credit Risk

Export Insurance Beyond Credit Risk#

Export insurance covers: buyer insolvency and default (commercial risk), government actions preventing payment or delivery (political risk), goods damaged in transit (marine cargo insurance), contract frustration due to force majeure, and wrongful calling of guarantees. Most exporters only insure credit risk, leaving gaps in political risk and contract frustration — the risks that cause the largest losses.

Political Risk Insurance for Emerging Markets#

Political risk insurance covers: currency inconvertibility (can't convert local currency to hard currency), expropriation (government seizes your assets), political violence (war, civil unrest, terrorism), and government contract repudiation. Providers: MIGA (World Bank), OPIC/DFC (US), UKEF (UK), and private insurers (Lloyd's). Cost: 0.5-3% of insured amount annually. Essential for any investment or long-term contract in emerging markets.

Marine Cargo Insurance Terms#

Three coverage levels: FPA (Free of Particular Average — only total loss), WA (With Average — partial loss from specified perils), and All Risks (broadest — covers all physical loss or damage except excluded perils). Always buy All Risks for valuable cargo. Cost: 0.1-0.5% of cargo value per shipment. Institute Cargo Clauses (A) is the international standard for All Risks coverage.

• Export insurance covers more than buyer default — political risk, transit damage, and contract frustration protection