Short-Term Export Credit Insurance

Short-Term Whole Turnover Export Credit Insurance Program

Short-Term Export Credit Insurance, initiated in 1989, provides companies with one-year blanket (whole-turnover) insurance cover for the exports purchased on short-term credits. The percentage of cover is up to 90% (unless otherwise is stated in writing) of losses due to the political and/or commercial risks for the shipments to be paid on 360 days at maximum. Comprehensive cover including pre-shipment period (180 days, at max.) is available whereby post-shipment cover is compulsory for the relevant applicants. Türk Eximbank is on-cover towards 176 countries at present. On the other hand, S/T Export Credit Insurance Program also enables exporters to obtain funding from commercial banks at favourable terms, since policy proceedings are assignable. Commercial and political risks covered within this Program are defined as follows:

Commercial Risks:

i) Insolvency of the debtor,

ii) Protracted defaults (up to 4 months),

iii) Repudiation of the goods,

Political Risks:

i) Transfer risks,

ii) Non-payment due to social turmoils such as, war, civil-war, rebellion, etc.,

iii) Legitimate acts/regulations in debtor's county hindering export transactions and/or resulting in non-payment,

iv) Non-payment or emergence of additional costs due to acts such as, seizure, nationalisation, confiscation, expropriation, etc.,

v) Non-payment of public debtor.

Premium rates ranging from 5 ‰ to 40 ‰ differ according to the criteria listed below;

§ Legal Status of the buyer (private/public); the premium rate for the public buyers is less than the rate for the private buyers in all countries, in principal.

§ Risk classification of the buyers' country; is determined by taking political and financial outlook of each country into consideration. There are seven risk classification groups ranging from A (the best) to G (the worst).

§ Payment term; (all credit terms) from open account to deferred payment L/C. (Issuing/guarantor banks are deemed to be the debtor for the covered transactions to be paid on deferred payment L/C terms).

§ Credit length; the period between the shipment date and the due date.

In S/T Export Credit Insurance Program, premia is charged over effected shipments and no deposit payment is required in advance.

By the 10th day of each calendar month, insured exporters are obliged to declare their each and every shipment effected in the previous month along with the (wholly or partly) overdues.

Waiting period for the loss to be ascertained is 4 months (unless otherwise stated in writing) in protracted defaults, repudiated goods and all political risks after the loss was emerged. As for the insolvencies, waiting period is applied as one month at maximum, upon the submission of receivables registration document to Türk Eximbank.

Receivables should be assigned to Türk Eximbank with all integrated legal rights upon claims payment. Any amount collected after the payment shall be shared between Türk Eximbank and the policyholder in compliance with the coverage ratio after deduction of expenses incurred for collection.

Furthermore, at the beginning of 1996, Türk Eximbank introduced a new short-term credit facility by reaching an agreement with two of the leading Turkish commercial banks. According to this agreement, the commercial banks discount the export receivables related to shipments covered under the Short-Term Export Credit Insurance Program of Türk Eximbank. Through this program, Türk Eximbank aims to channel a proportion of the commercial banks' funds to export financing. If the shipment amount is not paid by the buyer, Türk Eximbank indemnifies the unpaid amount under its guarantees to the banks.

Last saved: July 07, 2005