Claims and Indemnification

Abstract

The purpose of obtaining the ECA cover is to receive indemnification for a loss caused by non-payment of a credit by a foreign buyer. In practice, there are several stages in claiming and receiving indemnification from an ECA. When a foreign buyer defaults on payment of a credit, the insured exporter or bank is required to notify the non-payment to the ECA. Before paying indemnification for the non-paid amount of credit ECAs apply a waiting period. During this period the insured may be required to enforce the security provided for payment of the credit and take other actions necessary to minimise or avoid the loss. At the end of the waiting period the insured assigns the claim for payment of credit to the ECA and requests indemnification from the ECA. In the final stage, the ECA pays indemnification to the insured exporter or bank.