NZECO – Euler Hermes Top-up Cover
Page updated 2 Jul 2009
The NZECO and Euler Hermes Trade Credit have partnered to jointly implement a top-up cover arrangement to assist exporting clients of Euler Hermes.
This arrangement enables an exporter to obtain an excess layer of trade credit insurance underwritten by the NZECO. This may help exporters to maintain their export sales to creditworthy buyers, as well as continue to access trade finance from their banks. This top-up cover arrangement complements NZECO’s short-term trade credit guarantee.
Download NZECO Top-up Cover Policy
A specimen NZECO Top-up Cover Policy is available in Adobe PDF format: nzeco-tuc-v1.pdf (45kb)
The standard terms of the NZECO Top-up Cover Policy are based on the standard terms of the Allianz primary trade credit insurance policy. The buyer-specific terms and conditions of NZECO’s top-up cover will match the buyer-specific terms and conditions applied under its primary cover.
Eligibility
The NZECO top-up layer of cover is available to New Zealand exporters who have short-term (less than 360 days) trade credit insurance with Euler Hermes Trade Credit. NZECO’s top-up cover may be sought to either:
- replace primary cover on a foreign buyer(s) that Euler Hermes has partially withdrawn cover on; or
- provide a top-up layer of cover where Euler Hermes has only partially approved the buyer limit that has been requested by the exporter.
The NZECO top-up layer of cover must not exceed the level of the reduced or partially approved primary level of cover.
For example, if an exporter has primary cover on a foreign buyer reduced from $800,000 to $300,000, then the NZECO’s maximum level of additional top-up cover is $300,000. Or, if an exporter applies for a $800,000 primary cover limit on a buyer and Euler Hermes only approves $500,000 then the NZECO’s level of top-up cover can be up to an additional $500,000.
The goods or services insured under any top-up facility must also have a NZ-value added component of at least 30% (which can include profit margin).
How Do I Apply?
An exporter seeking NZECO's top-up cover must apply through Euler Hermes, who has the responsibility of arranging and administering this top-up cover on NZECO’s behalf. The NZECO retains the responsibility for formally approving and calculating the premium for each application for top-up cover, and an exporter applicant will receive a formal quotation from NZECO. If the exporter accepts and pays the up-front premium to the NZECO, then the NZECO Top-up Policy as well as Top-up Permitted Limits in relation to each foreign buyer will be issued.
A flow-chart diagram to this Top-up Cover process is available in PDF format: nzeco-flow-chart guide of top up.pdf (34kb)
How Much Does It Cost?
The NZECO will determine a Top-up Premium Rate for each Top-up cover buyer limit sought. This Top-up Premium rate is a risk-based percentage rate that is then applied to calculate the Top-up Premium. The formula applied for each Top-up Premium is:
(Top-up Buyer Limit x Top-up Premium Rate) x (Top-up Cover Policy Period/365)
How Do I Make a Claim?
Any claim under NZECO's Top-up Cover Policy must be reported first to Euler Hermes using their standard claim form who will administer the claim on NZECO's behalf. However the NZECO will make the final decision about whether to accept a claim in relation to their top-up layer of cover.