Last update: 07.28.23

Export Credit insurance

 

In Italy, insurance cover for export credits for the sale of goods or services and for the carrying out work abroad, i.e. for ‘non-market’ risks, is provided by SACE S.p.A..

 

PURPOSE

Export credit insurance enables you to protect yourself against the risk of non-payment or termination of the contract by the foreign customer or against the risk of non-repayment in the case of medium/long-term loans granted to the foreign customer.

 

WHO IT IS DESIGNED FOR

Italian companies with registered office in Italy that export goods and services or carry out works abroad, or foreign companies affiliated or controlled by Italian companies that sell abroad or carry out services/work abroad.

 

SUPPLIES THAT ARE ELIGIBLE AND IN WHICH COUNTRIES

Italian capital goods: machinery, installations and related studies, designs, works and services, semi-finished and intermediate goods exclusively intended for inclusion in capital goods; subcontracting of goods and services of EU origin  within the limits provided for by EU legislation.

You can export to all countries in the world except for countries where specific restrictive measures apply.

 

PAYMENT OF THE SUPPLY PRICE

The foreign buyer/customer must pay the supply price as follows:

  1. at least 15%, not eligible for official support, must be paid by the date of shipment and/or delivery or preliminary acceptance in the case of turn-key installations;
  2. the remaining 85% is payable in instalments (at intervals of no more than 6 months) with interest calculated at a rate not lower than the CIRR (Commercial Interest Reference Rate), if fixed.

The term of the loan must be greater than or equal to 24 months for ‘marketable risk countries’, as defined by European legislation (Communication from the Commission to the Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance (2012/C 392/01). For all other countries, the term may be less than 24 months. In any case, the maximum term must comply with international agreements in relation to the category of country and type of operation.

 

SCOPE OF OPERATION

Export credit insurance gives you, through the issuing of guarantees, insurance cover and securities for the export of goods and services or for carrying out work abroad, as well as the following type of interventions:

  • for lenders (buyer credit, documentary credit confirmations)
  • for companies (supply credit, works policy and guarantees).

 

The risks covered include:

  • Credit risk arising from the debtor failing to pay (buyer credit), caused by political and commercial events;
  • Credit risk deriving from documentary credit confirmations issued by foreign banks (resident in a country other than the country of the confirming bank) for payment of supplies of goods, services or work executed by Italian exporters or their subsidiaries/affiliates abroad (documentary credit confirmations), due to political and commercial events;
  • Credit risk arising from non-payment of credit due to political and/or commercial events; production risk (i.e. unforeseen termination of the contract by the foreign importer); risk of undue enforcement of sureties given for: (i)  participation in tenders/contracts, (ii)  performance (supplier credit), generated by political and commercial events;
  • credit risk arising from non-payment of credit acknowledged by the debtor or established by a court due to political and/or commercial events; production risk (non-recovery of production costs incurred by the company due to political and/or commercial events); risk of undue enforcement of sureties given for: (i)  advance payments, (ii)  performance; risk of destruction, damage, requisition, confiscation resulting from events of force majeure or acts of the Foreign State (works policy and securities/guarantees), generated by political and commercial events.

Policies and guarantees can be provided with reference to political, sovereign and sub-sovereign (public buyers) risk, as well as commercial risk. To mitigate the risks borne, special clauses and terms such as exemptions from duties, mandatory overdrafts and so on may be included in individual policies, or credit enhancement may be required (e.g. counter-guarantees, pledges of assets, cash collateral etc.).

 

LEGAL REQUIREMENTS

The beneficiaries of the coverage (pursuant to Article 3 of Ministerial Decree No. 199/2000) may be:

  1. national operators that obtain funding abroad, including through national banks;
  2. national or foreign banks that provide financing to national operators or foreign counterparts;
  3. foreign buyers of national goods and services as well as foreign buyers of studies, designs and works to be carried out by national firms;
  4. pursuant to By-laws, national operators and companies affiliated with them or controlled by them, including foreign subsidiaries, in their activities abroad.

 

With regard to reputational requirements, the following requirements must be met:

  1. no sentences, convictions, pre-trial supervision measures, disqualifications and/or equivalent measures must have been taken out in the last 5 years against you or persons acting on your behalf and no judicial proceedings are currently pending against those persons for offences of (i) bribery within the meaning of the OECD Convention (ii) national corruption and (iii) private sector corruption;
  2. the relevant information referred to above must have been provided;
  3. the entity must not be subject to sanctions or controlled/owned by sanctioned entities and must not be included among companies banned by the World Bank or other multilateral financial bodies.

 

SPECIFIC RULES FOR SMEs

There are no specific rules for small and medium-sized enterprises

 

CALCULATION OF PREMIUMS

The premium is calculated based on the risk and in any case must not be lower than a minimum level, established by the OECD, that export credit agencies (ECAs) undertake to apply for medium to long-term credit risk insurance transactions.

 

POSSIBLE ALTERNATIVES TO CREDIT INSURANCE

There is a private credit insurance market for short-term risks (under 2 years).

 

HOW CREDIT INSURANCE IS TAXED

No fees are payable by the exporter.

 

SUPPORT SERVICES

For further information or customer care:

[email protected] 

 

+39 06.6736.000

 

 

RELEVANT LEGISLATION

The relevant legislation relating to export credit insurance for risks with a duration of 2 years or more in OECD countries is as follows:

 

OECD REGULATIONS:

EU LEGISLATION:

  • Council Directive 98/29/EC of 7 May 1998 on harmonisation of the main provisions concerning export credit insurance for transactions with medium and long-term cover;
  • Communication from the Commission to the Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance – Commission Communication 392/2012 (amended and prolonged by Communication 457/2018);

NATIONAL LEGISLATION:

 

Last update: 12.12.20

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