Non-Payment Insurance Policy for Financial Institutions
The Non-Payment Insurance Policy for Financial Institutions covers the Insured's financial exposure against the risks of non-payment by the Obligor (with the underlying obligor being strictly a bank), under eligible trade finance transactions presented to Dhaman (i.e., short-term trade loans, letters of credit, etc.).
Dhaman pays up to 100% of the insured share/amount under the trade instrument.
Insured Risks
Credit Risks
Non-payment due to protracted default or insolvency of the obligor.
Political Risks
Restrictions imposed by authorities in the obligor’s country.
Political violence, war, civil unrest.
Expropriation, nationalization, or confiscation.
Currency inconvertibility or transfer restrictions.
Eligibility
Eligible Transactions
Export of goods and services of Arab origin. Import of goods and services of non-Arab origin by an Arab country from all over the world, provided the imported goods are developmentally sound for the importing Arab country, such as commodities, equipment, food, pharmaceuticals, etc.
Eligible Parties
Regional & International Financial Institutions Engaging in Arab-Related Trade Finance Activities.
Conventional and Sharia-compliant financial institutions
Eligible Trade Finance Instrument
Eligible Trade Finance Instrument Confirmation of Letters of Credit, including Transferable Letters of Credit. Discounting under Avalized Draft and Bankers Acceptances. Short Term Trade Finance Loans. Post-Shipment Financing or Re-Financing associated with LCs. Irrevocable Reimbursement & Payment Undertakings (IRUs & IPUs). Purchase of Payment Obligations under different trade instruments. Sharia Compliant Financing Instruments such as Murabaha. Participation in Syndicated Loan Agreements covering the above-stipulated trade finance instruments such as LCs and ST trade finance loans.
Procedure
1
Entering into an agreement
Issuance of an insurance policy
2
The insured sends an inquiry with all transaction details
Enquiry for insurance
3
Insurance Offer - Non-Binding Indication
Dhaman sends a Firm Insurance Offer or Tentative Non-Binding Indication
4
The Insured sends a formal insurance application along with a copy of the instrument
Insurance application
5
Insurance decision
Dhaman issues an Insurance Decision for the underlying transaction
6
The Insured sends a declaration of utilization upon shipment or drawdown
Declaration of utilization
7
Premium payment
The Insured pays the due insurance premium
8
In case of default, claim, compensation & recovery processes are followed
Claim & compensation
End
Contact Us
Shaimaa M. Aldoussari Head of Financial Institutions Section
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