The Research Of The Underwriting Case For Short Term Export Credit Insurance

Business credit refers to the creditor-debtor relationship between the enterprises. Businesscredit financing is in essence the creditor-debtor relationship formed between the creditproviding and credit receiving enterprises. The exporter, to expand the commodity sales,provides business credit to the importer, generating accounts receivable during this process.The credit sales used by exporter is an important means of short-term financing for theimporter. Short-term export credit insurance is primarily targeted at international trade, andassociated with the loss from the credit risk to which exporter is exposed on accountsreceivable in providing business credit. The export credit insurance is a policy insurancedeveloped for the purpose of supporting the export by the state, and satisfies WTO rules. Atpresent, China’s short-term export credit insurance is mainly managed by China Export&Credit Insurance Corporation (hereafter CECIC). After the financial crisis, the businessvolume of China’s short-term export credit insurance has been soaring. In2009the amount ofunderwriting reached90.9billion US dollar,150billion US dollar in2010,200billion USdollar in2011, and expected to achieve240billion US dollar in2012. To cope with the rapidlyincrease of underwriting, CECIC has strengthened its underwriting capacity, with moreinvestment in labor and material resources, and made efforts to minimize the efforts on theprecondition of satisfying the market demand. This article consists of six chapters. Chapter1elaborates on the bonding point of short-term export credit insurance and China’s foreign tradedevelopment, together with the significance of the present paper and relevant researchachievements domestic and abroad. Chapter2reviews the practice of domestic and foreignexport credit insurance underwriting. Chapter3is a brief summary of the short-term creditinsurance risk management theories that are now in use. The theories are classified as politicalrisk management theories and business risk management theory. Chapter4makes a roughcategorization of the products of short-term export credit insurance and introduces the currentunderwriting procedures. analysis the benefits of insurance coverage against the risks for anenterprise. Chapter5cites several underwriting cases. Chapter6includes the case study toreveal the problems existing in China’s underwriting practice and proposes somecountermeasures. The author concludes through case study that CECIC should enhance theintervention of business negotiation in advance on the part of the policy holders, and vary theunderwriting mode according to the payment mode. More work needs to be done to cultivateunderwriting talents with comprehensive skills, with the devolution of underwriting rights tosuit the market demand. One additional step in the underwriting procedure, namely, the insurance policy analysis, should be included, and the research and development of more riskidentification tools is necessary. Finally, significant importance should be attached to theacquaintance with and the evasion of legal risks.