VInsurance Against the Risk of Inability to Fulfil an Export Contract

The risk of inability to fulfil an export contract (so-called manufacturing risk) consists in possibility of cancellation or interruption of an export contract on foreign importer’s part during manufacturing.

Reasons may vary; they are not only insolvency of a foreign importer or refusal to accept the goods but they may also arise from political, financial or macro-economical situation in the importer’s country. Insurance covers the risk of the exporter of incurring a financial loss as a result of inability to fulfil the export contract. It may be arranged either separately or in succession to insurance of the export or pre-export credit.

The insured party is directly the exporter.

An insurance loss is partial or full impossibility for an exporter to fulfil an export contract on the agreed dates, not even during the waiting period for commercial or political reasons, or their combination. Commercial reasons are general inability of an importer to pay for own due obligations (insolvency) or breach of an export contract on importer's part, particularly refusal of the fulfilment by the exporter, or any other action or inaction of the importer showing the importer considers the export contract expired or has no interest in its further performance. Among political reasons belong e.g. administrative decisions or legislative measures of the importer's country preventing fulfilment of the export contract or restricting conversion of payments as well as other events in the country of the importer as war, revolution, civil disorders and natural catastrophes.

The amount of insurance premium depends on the extent of the insured loss, on assessment of character and risk level of the importer, assessment of risk level of country or territories related to performance of the export contract and on the amount of the self-retention. The negotiated amount of the insurance premium already includes possible increase or decrease of the insurance risk and is unchangeable during the whole duration of insurance.

The preliminary premium calculation is available through interactive calculator.

• The share of value of supplies with the origin in the Czech Republic in the export value – rules you can find here,
• trouble-free credit history1 of entities2,
• The entity2 has existed and executed the activity being the subject of export for no less than 2 years before submitting the application for insurance against the risk of impossibility to perform export contract or its activity follows up on the activity of its legal predecessor – a person that carried out the activity for no less than 2 years before submitting the application against the risk of impossibility to perform export contract
• reinsurance and security of receivables under the Export Contract
  • insurance with EGAP – B, Bf, C, Cf, D
  • insurance with a commercial insurer
  • letter of credit
  • 100% advance payment (at least 30% before commencement of production)