Alongside the Fund’s general policy to expand its cooperation at the international level with all other peer ECAs and export credit insurance entities within expert communities like the Berne Union and the AMAN Union, EGFI is open for bilateral cooperation with all other export credit and investment insurance bodies with all sizes and levels and legal frameworks in any possible fields. The possible frameworks are listed but not limited to the items below:
1) General framework agreements in all export credit and insurance fields
2) Facultative Reinsurance Agreements for the implementation of risk sharing techniques for export from or import to Iran.
3) Credit worthiness Assessment cooperation to evaluate more effectively the reciprocal buyers of the two countries.
4) Exchange of underwriting and other technical information and know-hows
5) Providing consultancy services on legal matters and claims cases in Iran or any other third market in case the Fund has any experience in.
6) Providing any counter guarantees or back to back cover upon the request of any foreign bank or peer ECA to facilitate trade and investment in between the two countries.
Facultative Reinsurance Agreement with peer ECAs Flowchart
The first work flow: import to Iran –
Receiving a direct request from the applicant company/peer ECA in the country of origin
1) The Iranian importer, considering the fact that, he intends to buy from a foreign supplier/seller on credit terms, and enjoy the insurance coverage of the export credit insurance agency in the country of origin (seller's country) and, if necessary, in the country of destination (Export Guarantee Fund of Iran) submits a request for the credit worthiness assessment of its company and setting a credit ceiling by the Fund. This request can be sent to the Fund by the peer ECA and request for the credit assessment of the Iranian buyer.
2) By sending the initial credit assessment application form, the Fund requests additional documents and financial statements of the Iranian importing company for the last three years, and at the same time, the Iranian importer's willingness to purchase on credit terms is notified to the export credit insurance institution in the country of origin introducing the trade partner in the seller's country and informs its peer ECA of the start of the credit assessment process.
3) Upon the receipt of the applicant's financial statements and additional information, the process of the credit assessment of the Iranian importer is carried out and its credit rating and ceiling is determined. Based on this credit report, the Fund expresses its readiness to accept part of the risk up to the established credit limit, subject to the readiness of the peer export credit agency in the country of origin for the issuance of the insurance policy as the main insurer. Also, the Fund announced its readiness to take up to 50% of the volume of the contract/sales invoice within the credit ceiling limit of the Iranian applicant provided that the volume if risk accepted does not exceed the credit limit established by the fund.
4) The standard audited IFRS financial statements received of the Iranian buyer along with the credit assessment report containing the credit rating and ceiling are sent to the peer ECA (main insurer).
5) The main insurer (peer institution in the country of origin) conducts a separate credit check on the Iranian buyer / importer and determines his credit rating and ceiling, and in the meantime, while inviting the exporter from his country, notifies the conditions of insurance coverage to its client and at the same time informs the Fund of the above mentioned processes and final credit opinion, the percentage needed from the Fund to accept the risk and other details.
6) Within the framework of the facultative reinsurance agreement in between the Fund and its peer ECA, the addendum of risk ceding portion and the acceptance of a part of the risk of the Iranian party for repayment at maturity is issued in the form of a "Reinsurance Cover Note" and sent to the peer institution in the country of origin (the main insurer) be be signed reciprocally.
7) The contract for the definitive sales of goods/services between the foreign party and the Iranian buyer is jointly covered with the issuance of an insurance policy by the main insurer backed by the addendum issued by the Fund as the reinsurer in favor of the main insurer.
8) If the credit ceilings set by the Fund and the main insurer do not match in this mechanism, some technical and provisionary measures will be taken to balance the percentages of the reinsurance cover or obtain the necessary commercial guarantees from the debtor (Iranian buyer) to increase the credit ceiling.
9) If the Iranian buyer's credit limit is not sufficient, or the risk of default or non- payments are high from the Fund's point of view, the entire issue of insurance cover will be canceled and the impossibility of providing reinsurance cover will be announced to the applicant and the peer institution in the country of origin.
10) Once the Insurance Policy is issued the whole transaction is safeguarded against political and commercial risks of the buyer and accordingly in case of a payment default on the side of the Iranian buyer, the foreign supplier may claim for compensation to be paid by the main insurer, through the claims notification policy of the insurer, which is fully paid for after the claims ascertainment process and the deduction of franchise.
11) After the claims payment the main insurer asks the reinsurer's to pay its share of claims according to the share of the risks covered.
12) EGFI as the reinsurer pays out its share of the claim and as the Fund is in close contact with the Iranian buyer. it follows up the case to make recoveries on behalf of the main insurer as well as its own share of the claims paid.
To download the reinsurance proposal for risk ceding to EGFI please click
here. After filling out the form kindly send them to the emails below together with all other financial data and the related documents:
Tatlari@egfi.org
Intl@egfi.org
The second work flow: import to Iran –
Receiving a direct request from the Iranian applicant /Sending a request by EGFI to the Peer ECA in the destination country
A) The Iranian exporter who intends to sell goods and services on credit terms to a foreign buyer/employer and use the insurance cover of Export Guarantee Fund of Iran, submits a request for the credit assessment and the evaluation of the credit limit of the foreign buyer/employer to the Fund.
B) After obtaining additional documents from the Iranian seller and receiving the Credit Assessment Application form, according to the business relations and dealings the Fund has with international credit rating companies or other credit information data centers of the specialized export credit and investment unions the Fund is a member of, it will order the purchase of a credit report to the specialized institution in that area (in each geographic region the Fund has relations with a professional institution with the related experience of that region) and after receiving the relevant credit report, and according to the financial statements of the last three years of the foreign company and its sales volume, EGFI will accomplish a thorough credit assessment of the foreign buyer and determines its credit ceiling for that foreign buyer/employer with the domestic localized credit worthiness assessment models of the Fund.
C) At the same time, the Iranian exporter's willingness to sell on credit terms, is announced by introducing the foreign trade partner in the buyer/employer' country to the EGFI's peer ECA which is in charge of the Export Credit Insurance in the destination country and the foreign buyer's credit assessment application is requested from the peer institution.
D) After the completion of the process of determining the credit rating and ceiling of the foreign buyer by the Fund, depending on the determined credit limit and the cover capacity of the Fund, the issue of the possibility of providing cover, completely by the Fund without ceding the risk to the peer institution will be studied. If the credit limit of the foreign party is insufficient compared to the value of the contract or the commercial invoice/or the value of each part of the shipment, using the capacity of the Fund's counterpart to accept part of the risk up to the established credit limit and act as the reinsurer is suggested to the Export Credit Agency in the target market.
E) Reinsurance offer to cede a part of the risk within the framework of the General Facultative Reinsurance Agreement that has already been signed between the Fund and the peer institution in that country is suggested. In the meantime the rating and credit ceiling of the foreign buyer is revealed to the potential reinsurer (Peer ECA) through the completion of the Reinsurance cover proposal form in that country, and the percentage of the Fund's cover and the degree of willingness to cede the risks and the limit and the main indicators of the credit limit verification and the collected information are all sent to the potential reinsurer to consider the case.
F) In view of the fact that it is easier for the peer institution to receive financial statements and confirm their authenticity and additional information in the destination country and it is more possible to access reliable credit information, the credit assessment process of the foreign importer/buyer is carried out by the peer institution according to the Fund's proposal and the rating and credit limit of the foreign company is determined and is announced to the Fund by that institution. The potential reinsurer reveals its final decision of the credit standing and credit ceiling of the buyer together with the issue of its readiness or lack of readiness to accept part of the risk and determining the level and share of risk participation of the peer institution is sent to the Fund.
G) The main insurer (Export Guarantee Fund of Iran) and the Reinsurer, carry out their separate creditworthiness assessment on the buyer/importer and determine its credit rating and limit, and if the credit limits reached by the Fund and that determined by the reinsurer does not match in this mechanism, underwriting and provisionary measures are taken to balance the percentages of primary and secondary cover and leveraging the risks evenly in this risk sharing mechanism. Otherwise in order to obtain a risk free margin, a secondary system of getting the necessary collaterals in the form of commercial guarantees/promissory notes from the debtor (foreign buyer) is enforced.
H) The insurance cover policy and conditions to cover the sales contract / commercial invoices are announced to the Iranian exporter by the Fund, and at the same time, the general information contained in the previous paragraph along with the amount / percentage of the risk cover requested from the Fund and other contractual details are brought to the knowledge of the peer institution (reinsurer). Within the framework of the General Facultative Reinsurance agreement, the addendum of reinsurance cover note signifying the percentage of ceding a part of the foreign buyer's risk for payment defaults at the maturity dates, is issued and sent to the counterpart institution (Reinsurer) in the destination country) for mutual signature.
I) The contract for the definite sales of goods/services between the foreign buyer and the Iranian seller is covered with the issuance of an insurance policy by the Fund on the basis of the issuance of an addendum of reinsurance cover note by the peer institution in the destination country (Reinsurer).In case of a payment default by the foreign buyer, the Iranian exporter notifies the claim according to the claims notification policy of the Fund, and after the claims ascertainment process, the Fund compensates for the claim after the deduction of franchise. After the claims payment by the Fund, we ask the reinsurer to pay for its share of claims according to the share of the risks covered.
J) The reinsurer pays out its share of the claim and as it is in close contact with the buyer of its own country, the reinsurer follows up the case to make recoveries on behalf of the main insurer as well as its own share of the claims paid.
K) If the credit limit of the foreign buyer is not sufficient or the general political and commercial risks or payment defaults are high from the point of view of the Fund or the counterpart institution in the buyer's country, the whole issue of insurance coverage of the Fund will be canceled and the impossibility of providing insurance or reinsurance cover is revealed to the Iranian exporter.