This insurance policy covers the 100% risk of the impossibility of cashing deferred collection export bills (namely letters of credit, bills or time drafts) with short and medium-term credit periods, that have already been discounted by the Iranian banking system against the occurrence of political and commercial risks, without the right of appeal or legal action against the insured for the discounting/forfeiting bank. 

In other words, those exporters who want to discount their export bills with Iranian banks and use banks’ post-shipment facilities in the form of supplier’s credit and under the title of " the Discounting of export bills", and receive cash from the bank may use EGFI’s insurance policy.
If the bank granting the facility, as a buyer of the debt of the foreign party, is not sure about the credit level of the foreign buyer/employer or its bank, it can, at the request of the Iranian exporter, after going through the credit assessment process of the foreign party and verifying the sufficiency of their credit or that of their bank may ask the exporter to apply for the Fund’s insurance cover. The Fund first determines the credit rating and ceiling of the foreign buyer/employer/bank and after receiving the relevant insurance premium by the insured, this type of insurance policy is issued to ensure the financing bank that the export bills are cashed on the maturity date with no franchise.
In this mechanism, the discounting/forfeiting bank, in case of not receiving the payment of the discounted export bills on the due date, which may occur due to the default of the foreign debtor (commercial risks) or due to the acts of the host government (political risks) may claim from the Fund and receive 100% of the loss from after the claims waiting period.
The amount of the relevant insurance premium is calculated according to 4 different parameters:
•    The destination country risk group
•    The repayment period
•    The credit rating of the buyer/advising or confirming bank (form Category A to Category E)
•    The Franchise and maximum political or commercial risks under EGFI’s cover. 

Who might apply?
The Iranian discounting / forfeiting bank who discount the deferred export bills of the Iranian exporters and all exporters who wish to consider credit terms for their creditable foreign buyers but need to be empowered by cash payments by some banks in the supplier’s credit mechanism.

What risks are under cover?
•    Rejection or objection  of the foreign debtor/the advising bank to make any payments for the export bills due to commercial/political reasons 
•    Bankruptcy, insolvency, lien or suspension of activities of foreign buyer/ advising or confirming bank 
•    The outbreak of war or a state of war or other instances of Force Majeure
•    Applying economic policies by the target markets government that block the receivables from the foreign buyer or its bank.
•    Severing of political relations with the foreign debtor/confirming country so that as a result, the discounting bank does not succeed in receiving its receivables from the foreign party on the due date.
•    Expropriation of property from the foreign debtor due to nationalization or confiscation of property and failure to pay on the maturity date.
•    Non-payment or any example of protracted default of the buyer or its advising or confirming bank.