HBOR FAQ - Export Credit Insurance

Export Credit Insurance

1. To whom is HBOR’s policy of insurance of export receivables intended and what is its purpose?
HBOR's export receivables insurance policy is intended for exporters who sell their goods or services in the foreign markets with an agreed payment deferral. If the foreign buyer does not pay the due liability to the exporter, provided that the exporter has delivered the goods / rendered the services to the foreign buyer in accordance with the terms and conditions of the export contract, HBOR will pay indemnity to the exporter.

2. How to execute a contract on an export transaction with deferred payment?
Before submitting an application for the insurance of export receivables to HBOR, the exporter should define the terms and conditions for the sale of goods or services with the foreign buyer, which includes: - Quantity and value of export goods / services - Dynamics and terms and conditions of delivery of goods / rendering of services - Deadline for payment and method of payment. After receiving a foreign order or after executing a contract with a foreign buyer, the exporter can start preparing an application for the insurance of export receivables .

3. How to submit an application for insurance to HBOR?
The insurance application form is available on HBOR's website: or it can be delivered to the exporter by e-mail. The insurance application form is a standardised template and it contains basic information about the exporter and the foreign buyer as well as information about the contracted export transaction for which insurance is requested (export goods, contracted export value, delivery dynamics, payment deadline, etc.). The exporter should pay special attention to the amount of the requested insured sum, which the exporter states in the insurance application, because the requested insured sum represents the exporter's exposure to the foreign buyer. For example, if an exporter delivers goods in the value of EUR 50,000 to a foreign buyer every month with an agreed payment deadline of 90 days, the exporter's exposure to the foreign buyer amounts to EUR 150,000, and the insured sum should equal that amount. The exporter should request that the duration of insurance covers the period, during which it intends to deliver the goods to the foreign buyer. The exporter submits the signed application for insurance to HBOR by regular mail to the address: HBOR, Strossmayerov trg 9, Zagreb, or by e-mail to the address:

4. How to obtain a credit report on a foreign buyer?
Together with the application for insurance, the exporter submits to HBOR the credit report of the foreign buyer, which contains information about its operations. Credit reports of foreign companies are prepared by specialised credit rating agencies. Currently, several credit rating agencies are operating in the Republic of Croatia, and the exporter can choose a credit rating agency from which it will purchase a credit report of the foreign buyer. The exporter can also authorise HBOR to order a credit report of a foreign buyer on its behalf and for its account.

5. What are the procedures of insurance risk assessment and insurance approval?
Risk analysis and assessment are performed by HBOR in accordance with all available information obtained from the exporter contained in the insurance application, the credit report of the foreign buyer and other sources. After risk analysis and assessment, HBOR makes a decision on approval or rejection of the insurance. When making a decision on the approval of insurance, HBOR defines the following terms and conditions of insurance: - Insured sum - Retention - Insurance premium - Insurance duration - Other terms and conditions of insurance. The insured sum should cover the exporter's exposure to the foreign buyer at any time of insurance duration. The retention represents the exporter's share in the risk and, in the practice, it usually ranges between 5% and 20%. The insurance premium depends on various factors such as: the creditworthiness of foreign buyer, the importing country, the payment deadlines, etc. The insurance duration is agreed in accordance with the exporter's dynamics of the delivery of goods / rendering of services to the foreign buyer.

6. How is insurance policy agreed between the exporter and HBOR?
The approved terms and conditions of insurance are agreed with the exporter under an insurance policy signed by the exporter and HBOR in writing. The insurance contract between HBOR and the exporter is considered concluded on the date when the insurance policy is signed by the authorised representatives of the parties to the contract.

7. What if the foreign buyer does not pay to the exporter for the delivered goods?
If the foreign buyer does not pay to the exporter for the delivered goods/rendered services by the specified deadline, depending on the respective insurance programme, the exporter, in agreement with HBOR, undertakes activities aimed at collecting the due receivables. Depending on the type of export transaction, for example: export of consumer goods, the exporter stops further deliveries to the foreign buyer. The exporter must inform HBOR, by the agreed deadline, that the foreign buyer has not paid for the exported goods / rendered services. Pursuant to the agreement, the exporter and HBOR invite the foreign buyer to pay and agree on the activities related to the enforced collection procedure. If the buyer does not pay the debt within 3 months from the due date of the debt, the exporter submits a claim to HBOR. The processing of the claim lasts one month, whereupon a claim acceptance or rejection decision is made. After the claim has been accepted, HBOR pays the indemnity to the exporter.

8. What if the foreign buyer is not eligible for insurance?
If the foreign buyer has a low credit rating and the requested insured sum is not acceptable for insurance in its entirety, the exporter is recommended to agree a partial advance payment, letter of credit, retention of ownership rights, corporate guarantee of parent company, etc. If HBOR rejects the exporter's application for insurance in its entirety, the exporter is recommended to request the foreign buyer to make an advance payment or to obtain a bank guarantee.