In legal terms, the parties of an export credit insurance transaction are the insured seller and the ECA or private insurer. In its capacity of insured, the seller is under obligation to pay the premium to the ECA or private insurer for insuring the export credit risk. Since the amount of the premium is not insignificant, the insured seller will usually shift the costs of the premium to the foreign buyer. This can be done by including the costs for export credit insurance in the contractual price agreed between the seller and the foreign buyer, or by charging the foreign buyer separately for the amount of the premium paid by the seller to the ECA or private insurer.

The insured seller’s shifting the premium costs to the foreign buyer does not mean that the foreign buyer becomes a party to the insurance contract between the seller and the ECA or private insurer. The seller remains in the capacity of the insured, and only the seller has the right to claim indemnification from the ECA or private insurer if the foreign buyer does not pay the credit to the seller.

The same situation exists when a bank provides a loan to a foreign buyer for purchasing goods or services from a seller and obtains export credit insurance for the risk of non-repayment of the loan. The bank will either include the amount of the premium in the loan amount or charge the foreign buyer separately for this amount.

Since the export credit insurance is a contract between the insured and the ECA or private insurer, neither the seller nor the bank is obligated to inform the foreign buyer about the seller obtaining the export credit insurance. Banks usually inform foreign buyers to which they provide a loan about this, while sellers may choose not to do so for various reasons. In such situations, sellers include the costs of the premium in the contractual price payable on credit terms, without informing the foreign buyer of that.

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