Export Credit Insurance

Abstract

All exporting companies know that basically export credit insurance is taken out to secure against bad debts. But by no means all exporters appreciate the full measure of the role of credit insurers in good financial management. Traditionally, the main disincentive to companies in failing to secure against nonpayment has not been the cost of cover, which is small, but complacency, or misplaced belief that a company can stand the occasional loss. Things are changing. In the emergent European marketplace it is predicted that the risk of loss will be greater than in the worst recessions of recent times, as the battle between potential losers and winners gets underway. Contrary to popular assumption, the need for export credit insurance will actually increase, the risk being even greater where one believes, erroneously, that it does not exist. This chapter sets out the range of practical benefits of credit insurance against the background of profound change, predictable and unpredictable, in the Europe of the 1990s.