How Much Does Export Insurance Cost? Premiums and Fees

Export insurance is a facility that protects exporters by helping them minimize the risk of loss on any unpaid balance owed by the buyer or by the bank that opens the L/C, or letter of credit (issuing banks).

Benefits of Export Insurance

The benefits of export insurance go not only to the exporter but also to the bank. For the exporter, the benefits are as follows:

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1. The exporter is protected from various payment risks and gains peace of mind when facing the risks of exporting, all at a very low premium.
2. It can encourage the exporter to push more boldly into markets in the destination countries.
3. It can strengthen the exporter's competitiveness in the international market.
4. It helps ease export liquidity problems, because export bills of exchange can be discounted at the bank with insurance as security.
5. The payment system is more flexible.

For the bank, the benefit is that it can receive a transfer of the exporter's right to indemnity. It also gains additional export bills of exchange to discount, because those bills were insured beforehand against various payment risks from the importer.

Export Insurance Costs

The cost of export insurance is calculated from the premium that is set. The premium is based on the term of payment, the payment period and the class of the importer's country. Premium rates range from 0.24% to 4.16%. For payment purposes, the countries that export payments come from are divided into several ranking grades, running from A to E.

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That is a brief look at the cost of export insurance. We hope it helps.

Other export insurance fees to be paid are a policy issuance fee of Rp500,000 per payment, a buyer information fee of Rp500,000 for each buyer, a premium deposit fee of Rp1 million for each buyer, and an administration fee of Rp20,000 for each invoice.