PROCEDURE FOR TAMING A POLICY : An intending exporter should fill in a proposal form (no. 12 1) available with all ECGC offices and submit it to the nearest office. After examining the proposal, ECGC would send him an acceptance letter stating the terms of its cover and premium rates. The policy will be issued after the exporter conveys his consent to the premium rates and pays a non-refundable policy fee. The premium rates are closely related to the risks involved and depend upon (i) length of the credit, (ii) terms of payment, (iii) credit worthiness of the buyer and his country and (iv) the past record of the exporter.

ECGC normally fixes a maximum limit of its liability for shipments in each of the policy years. It is therefore, advisable for exporters to estimate the maximum outstanding payment due from overseas buyers at any time during the policy period and to obtain the policy with Maximum Liability for such value. The Maximum Liability fixed under the Policy can be enhanced subsequently, if necessary.

Obligations of the Policy Holders: Following are the obligations of the policy holders:

1) Declaration of Shipments: An exporter who has taken a Shipments Policy has to send, by the fifteenth of each month, a declaration of shipments made in the previous month, in the prescribed form (No.203). An exporter who obtains a contracts policy has to send a declaration of all outstanding contracts intermediate after the policy is issued. Thereafter he shall send a monthly declaration of contracts concluded and shipments made by him during the previous month. Premium has to be paid along with the declaration at rates shown in the schedule attached to the Policy

2) Fixation of Credit limit on each Buyer: Commercial risks are covered by ECGC subject to approval of a credit limit on each buyer. Credit limit is the limit upto which claim can be paid under the policy for losses on account of commercial risks. As commercial risks are not covered in the absence of a credit limit, exporters would be well advised to apply to ECGC for approval of credit limit on buyer in the prescribed form (No.144) before making shipment. If complete information regarding the buyer and his banker is given in the credit limit application, it will facilitate receipt of credit information expeditiously.

ECGC obtains credit information on overseas buyers through banks and credit information agencies. On the basis of credit information and its own experience, ECGC fixes suitable credit limits on overseas buyers.

In case an exporter has already obtained a credit report on the buyer or is in possession of other information that can help ECGC in fixing credit limit, the same may be furnished along with credit limit application to facilitate quick decision. If the exporter needs an enhancement in limit, he may apply in the prescribed form (No.144A) giving his past experience with the buyer.

3) Reporting Defaults: In the event of non-payment of any bill, policy holders are required to take prompt and effective steps to prevent or minimise loss. A monthly declaration of all bills which remain unpaid for more than 30 days should be submitted to ECGC in the prescribed form (No.205) indicating action taken in each case. Granting extension of time for payment, obverting bills from D.P. to D.A terms or resale of unaccepted goods at a lower price require prior approval of ECGC.