ABSTRACT
The considerations a credit manager needs to weigh up in export credit are more complex due to the distances involved and the differences in local law and customs. Political considerations have greater impact on managing payment risk and the involvement of banks in the process is much greater. For these reasons, many companies credit insure their export sales where they are happy to cover their domestic sales on their own account. This probably suits the credit insurers, whose export credit insurance underwriting is regularly more profitable than that for UK, EC and North American trade. This is partly because they can charge more for covering export risks whereas the domestic market is very competitive; but the main reason is that the frequency of insolvency and the size of companies becoming insolvent is growing in the developed world. Further, with increased merger activity, the insurers have larger concentrations of risks on these corporate companies.
