Improving the Role of Eximbanks/ECAs in the OIC Member States
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Cofinancing Joint or parallel financing, normally of a project, where part I of the financing
involves export credit agency support and the rest comes from another source or
sources, such as bilateral loans or grants, an international financial institution, or
a commercial bank. Whatever the other source, there will almost always be at
least two separate financing streams.
Coinsurance Normally joint (but sometimes parallel) insurance on a project or contract
involving two or more insurers, one of which is an export (credit agency and the
other usually another export credit agency but could be a private insurer.
Commercial
risk
One of the two main categories of risk insured by export credit agencies (the
other being political risk). The term applies primarily to the risk of nonpayment
by a private buyer or commercial bank or a public buyer due to default
(protracted or otherwise), insolvency or bankruptcy, or failure or unwillingness
to take delivery of the goods (i.e., repudiation). Usually excluded are cases where
there are disputes between exporter and importer about product quality,
delivery dates, performance, and the like. Claims will generally not be considered
until these disputes are resolved. Also usually excluded are commercial risks on
sales from exporters in one country to their subsidiaries in other countries.
Comprehensive
facility
(1) An export credit facility that embraces both political risk and commercial
risk.
(2) The preference of export credit agencies, in their short-term business, to
diversify or balance their risk, or agencies’ requirement or preference that
exporters take out insurance for exports to a range of countries and buyers. This
is done to try to reduce the risk that the exporters or their banks will select
against the export credit agency, insuring only what they perceive as the worst
risks.
Confiscation,
expropriation,
and
nationalization
(CEN)
A major category of risks covered by insurers, especially investment insurers.
The common factor in these risks is that they involve assets being taken over by
the host government without appropriate compensation.
Cover The insurance provided by an export credit agency. Thus, for example, if some
insurance facilities are available from such an agency for country X, that agency
is "on cover" for that country. Conversely, where no insurance facilities are
available, the agency is said to be "off cover." An agency's underwriting policy on
a particular buying country is usually referred to as its cover policy for that
country. But the term "cover" is also used more loosely, to embrace insurance
against both political and commercial risks.
Credit
insurance
The principal product of an export credit agency. However, the term can include
both export credit insurance and domestic credit insurance (i.e., insurance on
sales within a country). Credit insurance protects the insured party (normally
the seller), in exchange for a premium, against a range of risks that result in
nonpayment by the buyer. In domestic cover, only commercial risks are
involved. In export credit cover, both commercial and political risks are normally
involved.