SOLUTIONS / Banks and Financials Institutions

Credit Insurance Solutions

Insurance of Confirmed Letters of Credit / Buyer Credit Insurance

COVERED RISKS

  • Insolvency of the obligor.
  • Failure or refusal of the obligor to pay on due date.
  • Currency inconvertibility and transfer restrictions imposed by the obligor's country.
  • Expropriation, confiscation or government intervention in the business of the obligor.
  • War or civil disturbance in the obligor's country

 

KEY BENEFITS

  • Protects balance sheet against losses due to commercial/non-commercial risks.
  • Reflects capital adequacy. Minimizes non-performing assets.
  • Enhances business volume.
  • Helps in structuring Shariah compliant financial facilities.
  • Reflects better Bank of International Settlement (BIS) insolvency ratio

 

ELIGIBILITY

  • Banks/Financial Institutions domiciled in Member Countries.
  • Banks/Financial Institutions domiciled in Non-Member Countries. Owned not less than 50% by the IDB or by Member Country.
  • Goods having at least 30% value added from one or more Member Countries.
  • Banks/Financial Institutions offering Shariah compatible products.

 

TENOR OF COVER

Up to 7 years

 

 

HOW IT WORKS

Documentary Credit Insurance Policy (DCIP)

 

  1. Importer arranges issuance of L/C.
  2. The issuing bank issues an LC to the exporter's banks.
  3. The exporter's bank applies to ICIEC to insure the LC.
  4. In case of non-payment by issuing bank, the exporter's bank submits claim and ICIEC pays compensation (90% loss).
  5. ICIEC recovers from the issuing bank and pays 10% back to the exporter’s bank.

 

Bank Master Policy (BMP)

 

  1. The exporter's bank concludes an insurance contract with ICIEC and pays premium.
  2. The bank provides Islamic financing to the exporter with the purchase contract as a security.
  3. In case the buyer fails to pay, the bank files a claim with ICIEC, which indemnifies the bank up to 90% of the loss.
  4. ICIEC recovers from the buyer and returns the 10% share to the bank.