The insurance of supplier credit enables the exporter to insure the payment for delivered goods and services against political and commercial risks arising form the concluded commercial contract.
An additional benefit of the insurance policy is assignment of rights to the commercial bank that finances an export transaction for the purpose of securing the loan, i.e. contracting more favourable terms and conditions of financing.
The usual cover ranges between 80% and 90% of the transaction value, depending primarily on the political risk of the buyer’s country.
- The exporter concludes an insurance contract with HBOR and pays the premium.
- The exporter delivers the goods or renders services to the buyer.
- The exporter’s bank extends a loan and uses insurance policy as collateral (endorsement of the insurance policy in favour of the commercial bank).
- The foreign buyer pays for the goods, and obligations under the loan contract are settled.
- In the event that the foreign buyer fails to pay for the goods, HBOR indemnifies the exporter.