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Specific Services Policy, as its name indicates, is issued to cover a single specified contract. It is issued to provide cover for contracts, which are large in value and extend over a relatively long
Service Policy
Where Indian companies conclude contracts with foreign principals for providing them with technical or professional services, payments due under the contracts are open to risks similar to those under supply contracts. In order to give a measure of protection to such exporters of services, ECGC has introduced the Services Policy. A wide range of services like technical or professional, hiring or leasing can be covered under these Policies.
What are the different types of Services Policy and what protection do they offer?
Specific Services Contract (Comprehensive Risks) Policy;
Specific Services Contract (Political Risks) Policy;
Whole-turnover Services (Comprehensive Risks) Policy; and
Whole-turnover Services (Political Risks) Policy
Specific Services Policy, as its name indicates, is issued to cover a single specified contract. It is issued to provide cover for contracts, which are large in value and extend over a relatively long period. Whole-turnover services policies are appropriate for exporters who provide services to a set of principals on a repetitive basis and where the period of each contract is relatively short. Such policies are issued to cover all services contracts that may be concluded by the exporter over a period of 24 months ahead.
The Corporation would expect that the terms of payment for the services are in line with customary practices in international trade in these lines. Contracts should normally provide for an adequate advance payment and the balance should be payable periodically based on the progress of work. The payments should be backed by satisfactory security in the form of Letters of Credit or bank guarantees.
Services policies are designed to cover contracts under which only services are to be rendered. Contracts under which the value of services to be rendered forms only a small part of a contract involving supply of machinery or equipment will be covered under an appropriate specific policy for supply contracts.
Risk Covered
Commercial
Insolvency of buyer
Transfer delays
Political
War, Civil War, Revolutions in buyer's country
Protracted default of buyer
LC Opening Bank Risks
Insolvency
Default
Loss Coverage:
90%
Important Obligations:
Obtain indicative premium rate at bid stage
Seek post awarded approval from AD/WG on award of contract
Obtain in-principle approval
Seek cover after payment of premium
Advise progress of project in accordance with PEM guidelines
Declaration of overdue payments
Filing of claim within 12 months from due date
Sharing of recovery
Highlights:
Cover can be either for political or comprehensive risks
Cover for full insurable value including retention portion
Premium can be paid in installments
Reduced premium for projects funded by Multi-lateral agencies.
Reduced loss coverage with proportionate reduction in premium
