Glossary and Frequently asked questions

To spare you some time, we have created a glossary of terms and put together frequently asked questions. If you miss anything, do not hesitate to contact us.

Glossary

Glossary 

Description
Agent fee/ commission Atradius applies a guideline based on national policy for renumerations of agents. A renumeration should not be in excess of 5% of (your share of) the contract price and should not  exceed EUR 4.5 million. For smaller transactions (with a contract value up to EUR 5 million) a higher percentage could be permitted, if its absolute amount does not exceed EUR 250,000. If the agreement with your agent is not compliant with the above mentioned guideline the transaction is in principal not eligible for insurance by the Dutch state, unless the outcome of an enhanced due diligence conducted by Atradius shows that the risk of bribery is acceptable.
Arrangement (Consensus) International agreement made in the OECD to limit the effects of unfair competition due to government support, subsidies and financing.
Berne Union The Berne Union is the association of private and public sector export credit and investment insurers which insure both buyer and country risk for international goods and services transactions.
Bond insurance Insurance against the risk of a buyer or its bank calling a bank guarantee.
Buyer Credit Insurance Policy Insurance against borrower default for a bank which has financed an export transaction.
Buyer non-payment risk  This is the risk that the buyer or borrower will fail to comply with its financial commitments.
Counter guarantee An individual guarantee or a guarantee issued under an exporter’s or contractor’s Supplementary Cover or stand-alone Bond Insurance, whereby Atradius undertakes, on behalf of the Dutch State, to reimburse the guaranteeissuing bank for payments made
to the buyer. As this eliminates the need for the guaranteeissuing bank to hold the exporter or contractor liable for the full amount of the guarantee, it frees up capacity under the exporter or contractor’s credit limit.
Country Risk Refers to risks related to the importing country and includes political risks (e.g. transfer restrictions, disturbances or war) and catastrophes (e.g. natural disasters such as storms, earthquakes and epidemics).
Credit Risk The risk that an exporter/bank will not receive the agreed contract amount or ot the entire amount, or will receive the
contract amount only after a long delay
Debt Consolidation A payment plan which can include rescheduling as well as cancellation of a country’s debt or part thereof.
Direct Guarantee Atradius’s irrevocable commitment, issued on behalf of the Dutch State, to indemnify a discounting or negotiating
bank if amounts due on bills of exchange or promissory notes or under irrevocable letters of credit remain
unpaid upon expiration of the relevant waiting period.
Exchange Risk Insurance Insurance to an exporter, who offers in foreign currency, against the risk that the exchange rate of the currency
changes during the tender period.
Export Credit Guarantee A guarantee to a (re)financier of a bank who provides an export credit.
Force majeure An unforeseeable situation beyond the insured’s control preventing fulfilment of the obligations under the export
contract.
Investment Insurance This insurance covers investment losses in companies abroad due to expropriation, war, transfer restrictions or breach of contract.
Lease Policy with Comprehensive Cover Insurance against non-payment of instalments due under a lease agreement for exported capital goods (financial lease) covering all lease instalments.
Lease Policy with Limited Cover Insurance against non-payment of instalments due under lease agreement for exported capital goods, generally covering only the first nine months’ instalments.
Lease Policy with Expropriation-Risk Cover insurance against expropriation for leased capital goods
Manufactering Risk The risk an exporter runs of nonpayment for costs incurred in concluding and executing an export contract inasmuch as it has failed to deliver the contracted goods and/or services to the buyer.
Medium-term transactions transactions with credit terms longer than twelve months (capital goods exports) or completion periods longer than twelve months (construction projects).
National content The difference between the contract price and the price of the goods and services obtained from abroad. The national content must be at least 20% of the contract price. If the national content is lower, but at least 15%, then any deliveries by foreign group companies of the exporter may be added to the national content to reach the minimum of 20%, provided the parent company of those foreign group companies is established in the Netherlands.
Progress payments Periodic payments to an exporter during the manufacturing period or a contractor during the completion period for work as it is completed as per the contract terms, made from a bank loan for which Atradius has issued a Buyer Credit Insurance policy on behalf of the Dutch State.
Promise of Cover Atradius’s undertaking, on behalf of the Dutch State, to issue an insurance policy. Atradius can issue a promise of cover to an exporter prior to or during negotiations with its client and/or banker. The exporter can then be certain of the risks Atradius will insure, as well as the terms and conditions of the insurance coverage, provided the contract comes into force within the period stated in the promise of cover.
Protracted default Failure by the buyer to pay the contractual debt after the waiting period (see below), which is not due to a dispute nor verifiable political or commercial factors.
Recourse Recourse is the recovery from a third party of losses suffered. If Atradius pays indemnification to a bank and wants to recover the paid amount from an exporter, we call this recourse. This can occur if Atradius has paid indemnification under a financing policy to the bank, or has paid an unpaid bill of exchange or, in retrospect, has wrongly made advance payments. These are very rare situations. A recourse situation can also occur if Atradius pays indemnification to the bank under a counter guarantee. In that situation Atradius will recover the suffered loss from you as the exporter.
Recoveries Amounts collected on overdue payments after indemnification of the insured.
Risk Insurance for Contractors Insurance for non-payment of costs incurred for construction projects, whether or not due to the buyer failing to issue all certificates.
Stand-alone Bond cover exporter’s insurance against a buyer or its bank making unfair calls on a guarantee issued by the exporter’s bank, for which the issuing bank holds the exporter liable for recourse.
Supplementary cover Insurance against the risk of unfair calling of a bank guarantee by a buyer or its bank, which an exporter may take out as a supplement to manufacturing risk insurance or credit risk insurance.
Waiting Period (Claim Filling Waiting Period, Claims Waiting Period) The period the insured must wait before filing a claim. The period starts on the payment due date and expires as stated in the insurance policy.
Working Capital Insurance Insurance to a bank against the risk that he will not regain the working capital that he issued to an exporter.

 

Frequently asked questions

Please find below the most frequently asked questions about insuring export credits with Atradius Dutch State Business (hereinafter referred to as Atradius).

Why should I take an export credit insurance?

By taking out export credit insurance it is possible to eliminate most of the - often long term - payment risks run on buyers or borrowers abroad. This is attractive for both exporters and banks. Export credit insurance often enables them to provide long-term finance for buyers abroad. Exporters can thus receive full payment for the export contract at the latest upon their delivery of the goods and/or services, whereas the buyers of Dutch exports can pay for them in instalments over a number of years. 

Which are the criteria for an insurance?

  • A Dutch exporter of goods or services is involved in the export transaction.
  • At least 20% of the total contract value is for Dutch goods and/or services
  • The contract is for the export of capital goods and/or related services or for construction works   abroad.
  • The contract has not yet come into force.
  • The transaction risks cannot be insured in the private credit insurance markets.

Does the country policy affect my insurance?

Our country policy states the conditions which must be met if an export transaction is to be insured. Please refer to the country policy page on our website which includes links to our specific policy for each country. For many countries there are no general underwriting restrictions. For weaker countries we often require a guarantee from a (local) bank or (local) government in order to provide cover.

Which percentage can be covered?

The amount we will indemnify for each insured loss depends on the percentage of cover stipulated in the insurance policy. This is generally 98% for losses due to political risks and 95% for losses due to commercial risks. This means that export credit insurance covers almost the entire risk of non-payment. Other percentages of cover may apply for specific types of transactions. The percentage of cover for, for example, project finance and asset-based finance  transactions is often lower.

Can Atradius finance exporters or buyers?

Atradius insures export credits offered by exporters or banks to buyers abroad. Atradius does not finance transactions. If the buyer abroad requires financing, an exporter can arrange this with its bank. The bank providing the financing can then take out export credit insurance with Atradius. It is important that an exporter and/or the financing bank involve Atradius at an early stage, i.e. during initial contract negotiations.

Contract value versus financing percentage

Generally, credit may be granted for a maximum of 85 % of the contract price (80 % for ships). For example: 

Contract price:                                   100

Export credit:                                      85

Buyer down payment:                     15

In some cases, such as for project financing, the percentages may differ. 

If the export contract requires the exporter to incur costs in the country of the buyer, these costs may generally not exceed 30 % of the value of the non-local (i.e. export) component of the transaction.

How long may a buyer take to repay?

The maximum term allowed for repayment of an insured export credit depends on the nature of the goods or services and the size of the transaction. For many transactions the maximum repayment period is usually five years. It may be longer if, for instance, longer periods are usual in the exporter’s particular sector or if the size of the transaction warrants a longer repayment period.

OECD member countries (including the Netherlands) have made agreements about maximum repayment periods. For buyers in OECD countries this is usually eight-and-a-half years and for buyers in other countries ten years. All export credits must be repaid in equal, semi-annual instalments.

For ship financing, project financing or financing for renewable energy projects, other maximum repayment periods and repayment schedules may be allowed. Please contact Atradius for more information.

How much does credit insurance cost?

An exporter or financing bank will not be charged any fees for submitting an application for export credit insurance. Once the export contract and related financial agreement, if any, come into force, a premium will be charged. The premium amount will depend on the severity of the risks to be insured, which is assessed by taking into account factors such as the risk rating of the buyer’s country, the buyer’s financial strength, the credit period and any security offered. For the premium calculator click here.

How much time does an application take?

It generally takes four to six weeks to process an application, provided you have supplied the information, including the financial information, required about your buyer. If obtaining this information takes extra time, it will take longer to process the application.

What is project finance?

Project financing is a special type of financing whereby the financing is not repaid or guaranteed by a company or government with a long credit record. Instead, it is repaid from the income generated by the (new) project once it is operational. Please refer to the project financing pages on our website for more information.

If your question is not included, please send an e-mail to info.dsb@atradius.com or call us at + 31 (0)20 553 2693.