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Covering Risks

Protection of your export credits against payment defaults

What are export credit guarantees for?

State export credit guarantees are a key foreign trade promotion instrument of Federal Government. They protect exporters against bad debt losses for commercial or political reasons and in many cases they are a prerequisite for the necessary funding of a transaction to be made available.

Hermes Cover is only to be had where the private industry does not offer appropriate or sufficient insurance cover. Consequently, the Federal Government concentrates on export credit guarantees for emerging economies and developing countries. Hermes Cover helps to open up markets, which are difficult to access, and to maintain business relations in challenging circumstances.

With the provision of Hermes Cover the risk of bad debt losses is, to a large extent, transferred from the exporter and/or the financing bank to the Federal Republic of Germany. For this, the policyholders pay a premium commensurate with the risk.

What are the key criteria for cover?

Eligiblity for cover

Not every export transaction is eligible for cover. The limits to eligibility arise at the point where a transaction may contravene the vital interest of the Federal Republic of Germany. Such restrictions on eligibility may be based on e. g. the type of goods concerned, the country of destination, a combination of the two, the parties to the contract, the payment terms agreed or other issues connected with environmental or social aspects, human rights or corruption.


Justifiability of the risk

The transactions submitted for cover must be justifiable in terms of the commercial and political risks involved. In this context the creditworthiness of the foreign buyer is scrutinized and the country risk is examined to determine the risk based on payment record in the past and the future ability of the country to service its debts.

Particular political interests of the Federal Republic of Germany may permit the granting of cover for export transactions with a higher risk. These may involve labour market initiatives, issues of structural or regional economic importance or foreign and development aid policy.

Protection against political and commercial risks

Export Credit Guarantees protect your company against bad debt losses for political and commercial reasons. In addition to foreign currency shortages in the buyer’s country, for example, warlike events, civil unrest or payment embargoes because of exchange restrictions can be political causes of loss. Commercial causes of loss are, for example, the protracted default of a buyer or his insolvency.


Grafik: Politische und wirtschaftliche Risiken im Geschäftsverlauf

Great variety of products for exporters and banks

Whether you export on short or longer payment terms, to one or several buyers, only once or regularly, whether you make use of bank loans or buyer credits or wish to finance complex projects: There exist suitable forms of cover for every export transaction – the Export Credit Guarantee scheme offers a comprehensive range of products.
In order to finance the export transaction your foreign buyer may either make use of a supplier credit or a buyer credit. If a supplier credit is taken out, the German exporter applies for cover for his transaction. If a bank finances the export transaction under a buyer credit, it can protect itself against the risk of non-payment with Hermes Cover (buyer credit guarantee).

Solutions for small and medium-sized enterprises

The Export Credit Guarantees of the Federal Republic of Germany support in particular small and medium-sized enterprises in establishing trade relations with business partners abroad.

Besides, as a small or medium-sized enterprise you will also benefit from easier access to export finance.

Foreign business – yes, but on a safe basis


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