Purpose

This policy insures financing institutions globally against the risks inherent to the confirmation of any documentary credit issued by the foreign institutions specified therein.

The maximum amount covered is that of the whole-turnover policy, and the insured may apply it at any time to any of the issuers included in the policy.




Risks Covered

In general, coverage is granted for political and extraordinary risks. Should the debtor (the issuer of the documentary credit) have the status of a public entity, the risk of non-payment by the debtor is also included.

Cover is provided in euros, the insured being able to choose between

  • Modality A : with the exchange rate on the date of payment to the beneficiary
  • Modality B : with the exchange rate on the fifth day as from the date of reimbursement.



Insurance Detail

  1. The exporter spots a business opportunity. His negotiations with the importer result in an order / commercial agreement
  2. The importer requests a local financial institution to open a letter of credit to instrument payment of the operation.
  3. The financial institution issues a letter of credit and requests a financial institution in Spain to add its confirmation.
  4. The Spanish confirming bank applies to Cesce for coverage under the Open Documentary Credit Policy.
  5. CESCE examines the application for cover to then issue the relevant insurance policy, which enters into force upon signature and premium payment by the confirming bank.
  6. The financial institution adds its confirmation to the documentary credit covered.
  7. The exporter dispatches the goods and sends the shipping documents to the confirming bank.
  8. The documentation is forwarded to the issuing bank (debtor of the operation) for acceptance. The confirming bank pays the exporter.
  9. The issuer refunds the amounts paid to the confirming bank. Failure to make this refund is covered by Cesce pursuant to the conditions of the Policy.



Contracting


ADVICE

1. The financial institution receives an application for confirmation of a Documentary Credit.

The financial institution expects to be adding its confirmation in a systematic and recurrent manner to a significant number of documentary credits issued by a foreign country's institutions.

It may address CESCE at any time to find out the conditions and cost of coverage by getting in touch with us via e-mail to cuentadelestado@cesce.es

PROCESSING AND DECISION

2. The financial institution sends CESCE its application for cover.

It specifies the total (revolving) amount required and the issuers it wishes to be included in the policy.

We suggest you complete and e-mail the application form to cuentadelestado@cesce.es for the purpose.

3. CESCE processes the application and responds to the financial institution.

CESCE will study the application. If coverage of the transaction is accepted in the conditions set forth, CESCE will issue a binding proposal undertaking coverage of the operation according to the terms approved. The cover proposal will remain valid for a specific period of time. Should cover not be approved in the terms applied for, CESCE will inform the confirming bank of its decision in writing

CONCLUSION

4. The financial institution signs the policy and forwards it to CESCE.

The confirming bank receives the policy and returns it duly signed to CESCE. This is an essential requisite for the conclusion of the insurance contract.

5. The financial institution pays the provisional premium.

Depending on the amount applied for and the kind of issuers included, the provisional premium is calculated and the insured proceeds to pay 20% of its amount. This premium payment is an essential requisite for the insurance policy to enter into force. As from there, the Insured may begin to communicate credits confirmed and their respective due dates.

This provisional premium will be subject to monthly regularization in accordance with the credits that are being notified by the insured.




General Conditioning


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