Case Study: ECI’s Single Risk Policy helps Dubai-based supplier tap a new market in Colombia

As part of its mandate to help UAE-based businesses further cement their position in the international markets, Etihad Credit Insurance (ECI), the UAE’s federal export credit company, has helped a Dubai-based firefighting equipment supplier expand its presence in Colombia through its strategic financial solutions.

The company, a leading producer of firefighting solutions offering all types of high-quality firefighting equipment and security systems, has signed a Single Risk Policy agreement with ECI to secure export credit protection from a buyer in Colombia.

Competing with two other large players, the said business was looking to participate in a tender—to be decided by the host country’s ministry—for the supply of firefighting vehicles. There was also no performance bond or any other security available as collateral to the risk.

Under this agreement, ECI has provided a comprehensive analysis of the country’s business climate, as well as coverage against commercial and political risks in Colombia that could lead to non-payment on the part of the buyer—allowing the company to trade in confidence and guarantee that they will get their receivables on time.

Commercial risks include insolvency of the buyer, failure or refusal of the client to pay the purchase price despite the fulfilment of all obligations towards the buyer; or failure or refusal of the guarantor to fulfil any of his/its obligations under a guarantee of payment issued by the guarantor in respect of an insured export contract.

Non-commercial risks include currency transfer restrictions imposed by the government of the buyer’s country, or any legislative action or administrative action or omission of the buyer’s country which has the effect of depriving the policyholder of the ownership or control of the goods sold under an export contract or of any benefit relating to such goods.

Political risks include any military action or civil disturbance in the buyer’s country that directly led to the buyer’s default.

In addition, by maximizing the trade credit insurance from ECI, the exporter also attained a wider access to trade finance and additional funding—gaining the full credit limit it needs fund its exporting operations to the host country.

“With this policy, we were able to significantly increase the company’s capacity to tap a new market in a new region. The agreement helped bankroll the business’ export operations as well as provide comprehensive coverage to guarantee that they get indemnity despite the commercial and political risks posed by the host country. We have provided them protection so they can open a potential market and in turn, fast-track their much-needed growth,” said Swarna Lata, Director of Underwriting, ECI.

With this agreement, the business was able to execute the orders, as well as get paid by the buyer on time—leading them to place their full trust in ECI for other tenders during the bidding stage.

Highlighting the need to get coverage as sectors enter a new world order, ECI CEO Massimo Falcioni said: “The current situation has taught us about the crucial role that credit insurance plays in sustaining business operations and upkeeping the global economy. Through our bespoke financial solutions, ECI is here to protect businesses as they penetrate more markets, especially as more opportunities have risen following the reopening of international borders. Our service helps them continue their expansion plans securely, boosting their competitiveness in global markets thereby sustaining the UAE’s national economic diversification.”