Scor Reinsurance Company

Posted on November 26, 2011 by Admin
Scor Reinsurance Company

Scor Reinsurance Company

When trying to evaluate the creditworthiness of overseas clients located thousands of miles away, exporters often throw up their hands in frustration. This is particularly so when different languages are involved.

Barriers become even more severe when foreign importers fail to pay for shipments. That’s because taking legal action in a distant land can be prohibitively expensive and practically impossible.

Usually the exporter’s bank is responsible for contacting either the importer’s bank or the importing company directly in an attempt to collect on the exporter’s commercial invoice. However, a home-country financial institution normally can’t force payment from an importer located in another jurisdiction. When the importer fails to pay, all the exporter can do is to launch an official objection through his or her bank.

Below are five practical tips on how exporters can prevent or mitigate losses that result when an importing company either refuses or is unable to pay for delivered cargo.

1. Export Credit Insurance

Export credit insurance is a specific form of property and casualty coverage that reimburses policyholders in the event that foreign buyers fail to pay for shipped products. Some financial institutions require that exporters insure their cargoes with export credit insurance. Otherwise, these exporting companies won’t qualify for business development loans.

Export Development Canada (EDC) had a dominant 64% share of the Canadian credit-insurance market in 2006. Private companies that underwrite trade credit insurance in Canada include Euler Hermes (17%), Coface (9.9%) and Atradius (1.3%).

A government Crown Corporation, EDC is Canada’s official export credit agency and largest provider of trade credit insurance. EDC offers the following competitive advantages to Canadian exporters.