Importance of Export Credit Insurance in the New Normal

BIIA member Rubix Data Sciences Pvt. Ltd. is pleased to share insights on the ‘Importance of Export Credit Insurance in the New Normal’ based on an interview with Mr. Subir Das, General Manager of ECGC Ltd, India’s largest export credit insurer.  Their latest White Paper on this subject covers the following topics:

• What is ECGC doing to cope with the increased demand for export credit insurance in today’s environment?

• ECGC has announced several relief measures around its policy compliance requirements including extending deadlines on document submission for claims etc. It has also announced a 50% waiver of processing fees and a 100% waiver of credit information fees.
• To deal with situations such as goods stuck in transit or lying undelivered, ECGC is empowering the exporters and giving them a lot of discretion to salvage the situation.
• ECGC has received a mandate from the Government of India that it should support MSME exporters that have been impacted badly. ECGC is giving priority to MSME exporters who make up 90% of the ECGC’s Portfolio.
• There has been a growing demand of export credit insurance over the past few months.

• How is ECGC preparing to deal with the enhanced claims of Indian exporters that may arise from the bankruptcy filings of their overseas buyers?
  • ECGC is well-equipped to handle this situation. Its solvency is higher than the required regulatory requirements.
  • ECGC is far more vigilant and watchful about what is happening on a real time basis, particularly the qualitative risk factors.
  • There is therefore a higher level of expectation about the information that ECGC procures from credit information agencies such as Rubix in order to help make underwriting decisions.

• How does ECGC’s Buyer Underwriting Scorecard System work?
  • The ECGC Buyer Underwriting Scorecard System looks at four broad parameters pertaining to an overseas buyer: Business Ability, Financial Strength, Transactional Behavior and Industry – and under each there are a number of sub-parameters that the Scorecard considers.
  • Broadly, Financial Strength and Transactional Behavior get the maximum weightage in the Risk Model.
  • Based on this Scorecard System, ECGC arrives at a Score for an overseas buyer. This Score indicates the credit insurance limit that can be assigned by ECGC to a particular buyer at a particular point of time.

• Factors that ECGC considers in deciding Country Risk Ratings?
  • ECGC’s  Country Underwriting Model generates a Score for each country after considering various broad parameters such as Economic factors, Geopolitical Factors, Country’s relationship with India, Transactional behavior of buyers in that country,  Experience of ECGC and other international Export Credit Agencies (ECAs) with that country.
  • During the Covid-19 pandemic, ECGC has been making rapid assessments of the risk of countries based on their evolving situation.

• The White Paper also covers other topics including:
  • Steps that exporters can take to help ECGC settle claims quickly
  • ECGC’s Export Factoring Product
  • ECGC provides exporters access to its database to allow them to check for information on overseas buyers
  • ECGC’s process for cancelling credit insurance limits of overseas buyers
  • How ECAs around the world are supporting their policyholders during the crisis
  • The importance of exporters reporting their payment experience with buyers to ECGC on a continuous basis

To download the White Paper, please click on this link: Rubix White Paper – Importance of Export Credit Insurance in the New Normal

This White Paper is based on a conversation that Kaushal Sampat, Founder of Rubix Data Sciences  (picture right) had with Mr. Subir Das, General Manager of ECGC Ltd, India’s leading export credit insurer (picture left).

About Rubix Data Sciences Pvt. Ltd.:  Rubix Data Sciences Pvt. Ltd. helps you to take prudent credit risks, build a robust supply chain and monitor compliance for your business partners in India and around the world.  Set up by highly experienced Risk Professionals who have worked extensively in the credit, legal and supply chain information domains, Rubix has been recognized as part of the ‘Start-up India’ scheme by the Department of Industrial Policy & Promotion (DIPP), Government of India, in 2018. The Rubix platform and its suite of reports, products and services are based on its extensive database of structured and unstructured data aggregated from over 100+ sources, customized predictive analytics and proprietary technology. Through its solutions, Rubix provides deep insights to Credit, Risk, Supply Chain and Compliance professionals, facilitating quicker and more effective decision-making.

About ECGC Ltd: ECGC Ltd. (Formerly Export Credit Guarantee Corporation of India Ltd.), wholly owned by Government of India, was set up in 1957 with the objective of promoting exports from the country by providing Credit Risk Insurance and related services for exports. It functions under the administrative control of Ministry of Commerce & Industry, and is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, and insurance and exporting community. Over the years it has designed different export credit risk insurance products to suit the requirements of Indian exporters and commercial banks extending export credit.

ECGC is essentially an export promotion organization, seeking to improve the competitiveness of the Indian exporters by providing them with credit insurance covers.