What Is Export Credit Insurance? Indispensable Risk-hedging Tool for Cross-border Sellers

What is Export Credit Insurance? A Must-Have for Cross-Border Sellers

In the context of today's rapidly developing global trade, an increasing number of companies are choosing to sell their products in overseas markets. However, alongside business expansion comes not only potential gains but also unavoidable risks. Especially in international transactions, due to differences in legal, cultural, and economic environments across multiple countries and regions, cross-border sellers face numerous uncertainties. In this situation, export credit insurance, as an important risk management tool, has gradually become a key means for cross-border sellers to avoid risks and ensure their interests.

Export credit insurance is a commercial insurance service provided by professional insurance companies, aimed at compensating exporters for losses caused by foreign buyers' bankruptcy, delayed payment, or risks. Simply put, when an exporter signs a contract with an overseas buyer, if the buyer defaults or for other reasons fails to pay on time, the export credit insurance company will compensate the exporter according to the agreed ratio in the contract. This insurance not only effectively reduces the financial pressure on enterprises but also helps them maintain normal production and operation activities.

In recent years, with the rapid development of the cross-border e-commerce industry, the importance of export credit insurance has become increasingly prominent. For instance, according to data released by a certain authoritative institution, the global cross-border e-commerce market size has grown at an average annual rate of over 20% in the past five years, and it is expected to reach several trillion US dollars by 2025. However, during this process, due to differences in payment systems, logistics networks, and laws and regulations in various countries, credit risks in cross-border transactions have also increased. Statistics show that approximately 30% of cross-border e-commerce companies have encountered varying degrees of difficulty in recovering funds during their first attempt at overseas sales. Reasonably using export credit insurance can significantly enhance the enterprise's ability to withstand risks and add confidence to its expansion into international markets.

So, specifically, what are the core functions of export credit insurance? First, it helps enterprises guard against credit risks. By evaluating the creditworthiness of overseas customers in advance, insurers can assist exporters in selecting more reliable partners, thereby reducing unnecessary disputes. Second, export credit insurance also plays a role in financing support. Many banks are willing to provide low-interest loans to exporters based on export credit insurance policies, which undoubtedly alleviates the pressure on corporate capital turnover. For those engaged in long-term international trade, export credit insurance can also serve as an important credit guarantee mechanism, enhancing their competitiveness in the market.

It is worth mentioning that in recent years, China has attached great importance to the development of export credit insurance and has introduced a series of supportive policies. For example, China Export Credit Insurance Corporation CICEC, abbreviated as Sinosure, as the only policy-oriented insurance company in the country, is committed to providing comprehensive risk management solutions for exporters. According to Sinosure's latest annual report, the cumulative insured amount in 2025 exceeded one trillion yuan, growing nearly 15% year-on-year, and the number of serviced clients also achieved significant growth. These achievements fully demonstrate that export credit insurance has become one of the important forces driving high-quality development of China's foreign trade.

Of course, in actual practice, how to choose the right export credit insurance product is equally crucial. Different types of export credit insurance target different customer groups and services. For instance, short-term export credit insurance mainly applies to small-scale, frequent goods trading activities, making it suitable for small and medium-sized exporters; whereas mediumand long-term export credit insurance focuses more on large-scale engineering project contracting or capital output projects, better suited for large and medium-sized enterprises with strong capabilities. Enterprises should carefully identify the advantages and disadvantages of various products before purchasing insurance, taking into account their own operating characteristics and development plans.

In conclusion, export credit insurance is not only an effective way for cross-border sellers to avoid risks and stabilize income, but also a necessary guarantee for promoting healthy and orderly development of international trade. In the future, with the continuous deepening of the globalization process, we believe that export credit insurance will play an active role in more fields, helping Chinese enterprises go further and more steadily on the global stage.