Ex-Im Bank provides a level playing field by countering the export credit subsidies of other governments. The loan facilities can also be used to support indirect exports. Two Louisiana banks, Bank One of Louisiana and Hibernia Bank, have Delegated Authority that enables them to complete transactions under the WCGP without Ex-Im Bank's prior approval. Export credit insurance policies provide protection against failure of a buyer to pay an obligation due to unforeseen commercial or political reasons. Insurance is a powerful export marketing tool, enabling exporters to increase sales by offering credit terms.
Insurance is also a cost-effective means to obtain working capital financing.
Ex-Im Bank insured receivables are more attractive than uninsured receivables to financial institutions that may purchase the receivables or include them as eligible collateral for lending. The insured party simply assigns the insurance policy proceeds to the financial institution. Typically, products supported under this policy are spare parts, raw materials, and consumer goods. Under the policy, Ex-Im Bank assumes 95 percent of the commercial risk and 100 percent of the political risk involved in extending credit to the exporter s overseas customers. This policy offers 90 percent to 100 percent coverage for both political and commercial risks for single or repetitive export sales to a single buyer.