Using the Application for Exporter Short-Term, Single-buyer Insurance

Exports are up to $5,000,000. The product must have 51% US content, including labor but excluding markup cost. This policy is for single or multiple shipments to one buyer on optional credit terms.  The maximum shipments periods are generally one year.  Repayment terms up to 180 days.  Commonly used to insure receivables against nonpayment by international buyers, extend competitive credit terms to international buyers, and arrange financing with the exporter’s lender by using insured foreign receivables as additional collateral.  Coverage does not include confirmed letters of credit, cash-in-advance sales, and certain military and defense-related items.  (Policy Coverage of Commercial loss due to the example of insolvency and protracted default) and political events (such a war) are covered. Coverage is the same for both political and commercial but varies based on the type of obligor.   Sovereign obligors – 100%, Private sector -90%, Letter of Credit transaction = 95%, bulk agricultural – 98%.  Interest covered up to WJS Prime minus ½% up to 180 days after the due date (to be covered, interest must be documented). Coverage, generally for 3 months, but can be issued up to 12 months to accommodate repeat sales to one buyer, or several shipments under one contract or P.O.

Special coverage may be obtained for pre-shipment coverage.  This is important where goods are special ordered, or there is a long manufacturing run prior to shipment.  By obtaining this pre-shipment option, the exporter will lock in coverage conditions for a specified period of time, generally up to 180 days from the contract signing.  Pre-shipment coverage does not include contract cancellation risk.  Endorsements for non-acceptance cover and other types of specialized cover are also available.   Ask Market World for this added coverage.

The insured must pay premium in full before policy is issued.  Report any overdue amounts in excess of 90 days, cease any shipments if buyer is insolvent or has past dues in excess of 90 days, and make a minimum of one written demand for payment at least 30 days before filing a claim.

Exporters (the Seller) or the broker, on behalf of the Seller, submit an application on the buyer, including a credit report and trade references.  Depending on the total shipment volume to be insured, buyer’s financial statements may also be required.  If approved, EX-IM Bank issues a COMMITMENT NOTICE, valid for 90 days, during which time Ex-IM Bank cannot rescind the offer of insurance.   To accept the commitment and have the insurance policy issued, the exporter is required to pay the full premium up front, which is non-refundable. There is no application fee.   The minimum fee is found on the table below:

Claims may be filed no earlier than 90 days after the due date, and no later than 240 days after the due date.   However, a notice of lateness of payment may be given anytime after a due date.   Market World will provide faxable documents for both of these conditions for use by the seller, for usage, if needed.    The seller is responsible for monitoring the payments unless delegated to a financial institution for financing where they assume oversight of the repayment. 

Subject to approval, policy proceeds (claim payments) may be assigned to a financial institution to arrange receivables financing or add insured export receivables to the borrowing base.

The application may be used by either the Seller or the Broker or in combination to gather appropriate information needs for submission to obtain a transaction guarantee or for financing.   It may be used at any stage of the sales process and updated then resubmitted to the EX-IM Bank as needed.  

The ability to update as needed has important advantages to the seller.  Generally, it is a prospective buyer that approaches the seller for a purchase after becoming aware of the product.   The seller should qualify the buyer as soon as it is believed that this is a likely customer.   Even if all the facts are not known about the buyer, the seller should check with the Country Limitation Schedule.  You will note that in the Public or Private sector, there are countries that can not receive exports, except for humanitarian aid, such as Afghanistan.  Collect as much information as possible about the references needed and an estimated Commercial Invoice Cost (invoice need not be generated).   Send the information to Market World for processing and submission on your behalf.   If it is known that there is a problem with serving this potential buyer, you will have this information without further misdirection of efforts.

While it is desirable to obtain as much payment as soon as possible in any transaction, in your negotiation process, you may find it desirable to extend either financing through a bank to your customer or finance the transaction up to 180 days.  In some cases, (agriculture, and others) it may be extended to 360 days for Short Term.  It is recommended that the last payment should be delivered 30 days before the expiration of the policy. You will notice under section 5 Financed Amounts and Structure, that there are many options available.   Even the option of allowing multiple shipments to eventually cover the specifications on the Commercial Invoice is possible.  Do also note that Unconfirmed Irrevocable Letter of Credit is available when using a bank for financing options.

Sellers may want to obtain added support services to aid in the marketing of their products.   The Market World Market program aids in the gathering of a potential buyer’s credit history.   This system is supported by Internet linkage of a dedicated domain name to a PDF form.   This form is totally customized to the need of the seller.   Results of the application are received directly by Market World to start a pre-screening process based upon the estimated commercial invoice amount.   If accepted, the inquiring customer is forward to the seller for negotiation of the product sales terms.   Upon this stage completion, a second submission will be made where a COMMITMENT NOTICE will be issued. Note under item 4 Transaction Description and Eligibility, the first stage would be indicated as “Response as an invitation to bid”.   Updates to this original submission would indicate “Sale in Negotiations” or skip to the final status of “Firm order.”