Improving the Role of Eximbanks/ECAs in the OIC Member States
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Premium The sum paid by an insured party (usually an exporter or a bank) to an export
credit agency for its facilities. Cover will usually not be fully effective until the
premium has been paid. Apart from recoveries, premiums are usually the main
source of income for export credit agencies most do not have significant
amounts of investment income, unlike other insurance institutions. Premiums
are normally calculated on the basis of the exposure, length of credit, and the
riskiness of doing business in the buying country.
Premium
income
Revenues accruing to an export credit agency from the receipt of premiums.
Preshipment
cover
Insurance of risks arising during the preshipment period.
Preshipment
credit
Credit extended for the preshipment period.
Preshipment
period
The time from the date of an insured contract until the date of shipment (or of
acceptance by the buyer)-in other words, the period up to the time the credit
period begins. Most export credit agencies offer cover for risks arising in this
period, but it is sometimes handled through a separate policy or as an addition
to the policy, rather than as part of the standard policy or facility.
Private buyer A buyer that is neither a government nor a public sector agency. Most export
credit agencies divide buyers into various categories, subject to differing terms
of cover and premium rates. Traditionally, the two main categories have been
private buyers and public buyers. Default by a private buyer is a commercial risk.
See also sovereign buyer.
Public buyer A buyer that is owned wholly or in a majority or controlling part by a
government but that (unlike a sovereign buyer) cannot commit the full faith and
credit of the government but can be sued and made bankrupt. Some export
credit agencies charge lower premium rates for public buyers. See also private
buyer.
Reinsurance The practice whereby an insurer passes on to another insurer (called a
reinsurer) part of the risk (and a portion of the premium income) of a policy it
has written. Export credit agencies can be involved in reinsurance both as
reinsurers and as reinsured parties. Export credit agencies receive reinsurance
from their governments or purchase it in the private reinsurance market. These
are several varieties of reinsurance (e.g., facultative, quota share, excess loss),
but the basic principle is the same. Some export credit agencies (e.g., in the
United Kingdom) are beginning to provide reinsurance to some private insurers
on political risks in some countries.
Repayment
period
This refers to the length of credit, or credit period. So it will begin from the
appropriate starting point of credit and end with the final payment date. See also
terms for goods. The Berne Union agreements and the OECD Arrangement set
maximum repayment periods for their participating members.
Repayment
terms
The schedule for payments due on a contract or loan insured by an export credit
agency. Generally, repayment terms reflect the nature of the goods and the value
of the contract. See terms for goods. The Berne Union agreements and the OECD
Arrangement set maximum repayment terms for their participating members.