What types of risks does an ECA cover?
An ECA may be established under public or private law. In Germany, Euler Hermes Aktiengesellschaft is the “mandatary”, i.e. the government’s agent. Also known as “Euler Hermes Bund”, it is tasked with the application of insurance instruments in order to hedge the risk of default for export transactions. It mainly covers politically motivated loss events, such as acts of war or the disruption of international payment transactions, as well as economic loss events such as non-payment or the insolvency of the customer of an exporter. The compensation amount consists of the outstanding debts for the loan amount as well as the incidental financing costs (e.g. Hermes premium). As a rule, the ECA will cover 95 per cent of the risks, provided that the preconditions for ECA cover are fully met.