Export credit agency is also termed as ECA or investment insurance agency. These are financial service providers that function as funding institutions for private business enterprises of a particular country that are carrying out their commercial activities overseas.
The export credit agencies offer insurance (for example, Trade Credit Insurance), guarantees and loans supported by government. The insurance policies offered by the ECAs provide protection from both political and commercial risk. The majority of industrially developed countries have minimum one export credit agency.
It commonly functions in the form of a public, national or publicly authorized administrative body, which generally backs organizations from their domicile nations. The majority of nations under the Organization for Economic Co-operation and Development or OECD possess minimum one ECA that functions in the form of a formal or semi-formal division of their governments. ECA functions with the help of private equity, however, in lieu of or with the authorization of the government of that country, for example, COFACE in France.
The government-backed export credits offered by these administrative units are different from the funding of private export credit.
The International Union of Credit & Investment Insurers or formally the Berne Union is one of the top associations for the export credit agencies. The Prague Club and Berne Union jointly have greater than 70 participant organizations all over the world.
A multinational investor or corporation asks for insurance coverage from an export credit agency at the time of investments or selling commodities or facilities abroad. The premium that has to be paid by the investor to the ECA is subject to the economic and political steadiness of that foreign nation, the credit quality of the purchaser and the terms and conditions of credit and also a number of other elements.
At present, the export credit agencies form the largest association of International Financial Institutions (public) of the world and they jointly surpass the World Bank Group in volume.
Following are the examples of export credit agencies:
Atradius Netherlands Global Credit Management solutions
ASHRA The Israel Export Insurance Corporation
Compaa Espaola de Credito a la Exportacion (CESCE, Spain)
Compagnie franaise d’assurance pour le commerce exterieur (COFACE, France)
Export Credits Guarantee Department (ECGD, the official UK Export Credit Agency)
Export Finance and Insurance Corporation (EFIC, Australia)
Export Credit Guarantee Corporation of India Ltd., the principal export Credit Insurance Company of India.
Export-Import Bank of the United States, the official Export Credit Agency of the United States
Japan Bank for International Cooperation
Hermes Cover – Export Credit Guarantee Scheme of the Federal Republic of Germany under the Management of Euler Hermes
Sinosure of China
World Bank activities of ECAs are frequently equated to the operations of the World Bank
Servizi Assicurativi del Commercio Estero (SACE SpA, Italy)
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Last Updated on : 1st July 2013