Priority Theme Coronavirus

Yes. If you have any specific questions on the cover available, please contact Euler Hermes AG +49 (0) 40 8834 9000).

The coronavirus does not result in the cancellation or limitation of existing cover. Eligibility for indemnification under Hermes Cover depends, among other things, on the type of guarantee instrument and compliance with the preconditions for indemnification.

The package of measures unveiled by the two Federal Ministers Scholz and Altmaier on 13 March 2020 is a comprehensive aid programme which is intended to help protect employees and companies from the adverse economic effects of the coronavirus. The package comprises a number of financing and guarantee instruments, including the Federal Government’s export credit guarantees. In the current crisis, they will continue to be available for covering export transactions and financing. The export credit guarantees, which shield exporters and banks from losses due to bad debts caused by economic and political factors, are granted on the basis of extensive budgetary authorisation. If additional cover for exports is required, this authorisation can be extended very quickly. Consequently, sufficient funds are available for the Federal Government’s export credit guarantees to provide effective protection for exporters and banks in these difficult times.

The Federal Government’s export credit guarantees are an important element of risk management for export-oriented companies. In times such as these, however, they are gaining additional importance for exporters because even long-standing and solvent customers can suddenly face payment difficulties through no fault of their own as a result of the coronacrisis. With its export credit guarantees, the Federal Government offers you extensive protection as the risk of default is largely transferred to the Federal Government. In practice what this means is that if your customer is unable to honour its payment obligations, the Federal Government will step in. Whether your foreign customer is still obliged to pay despite the corona crisis depends largely on what is stipulated in the applicable contract. If, for example, your customer can rely on a force majeure clause to terminate the contract, it will no longer be under any obligation to pay.

Consequently, we recommend that you check your contracts to see what they say: 
- How are the risks of unforeseen events occurring during the performance of the contract distributed?
- Are there any rights of termination?
- Do you bear the procurement risk if your subcontractors are unable to deliver on time due to unforeseen circumstances or do you yourself have the right to terminate the contract in order to prevent contract bonds from being drawn on?

You can apply for contract bond cover with the Federal Government to cover the risk of contract bonds being drawn on despite termination of the contract on your part. 

The export credit guarantees are granted on the basis of extensive budgetary authorisation, which can be extended at very short notice if necessary. Sufficient funds are available to support exporters and banks. 

Eligibility for cover and the justifiability of the risk involved in the transaction remain the decisive criteria for the issue of export credit guarantees. Both criteria must be examined and found to have been satisfied in the application procedure for each individual case. This applies equally in a crisis situation. However, the responsible ministries and Euler Hermes, as the mandatary of the Federal Government, are doing their utmost to ensure that decisions are taken as quickly as possible.

As a basic rule, export credit guarantees are available to all exporting companies that have their registered office in Germany.

Eligibility for cover and the justifiability of the risk involved in the transaction remain the decisive criteria for the issue of export credit guarantees. Both criteria must be examined and found to have been satisfied in the application procedure for each individual case. The economic impact of the Corona virus may play a role in this process.

In the current crisis, the Federal Government and Euler Hermes, as the mandatary of the Federal Government, are doing everything in their powers to make the processing of applications as unbureaucratic and fast as possible. Appropriate organisational and personnel arrangements have already been taken. Irrespective of all efforts to keep the application processing period as short as possible, the processing time depends materially on the complexity of the transaction to be covered and the quality of the documents submitted by the applicant.

As a general principle, all requests for cover must be submitted before the risk commences. This means that supplier credit cover must be applied for before the start of delivery and manufacturing risk cover before production begins.

Hermes Cover offers exporters protection against losses due to bad debts. This also applies if the insolvency of your foreign customer is the result of a pandemic. If your customer is unable to meet its payment obligations, the Federal Government will generally step in. The existence of a valid payment obligation is decisive!
Whether your foreign customer is still obliged to pay in spite of the Corona crisis again depends largely on what your contract says. If, for example, your customer can rely on a force majeure clause to terminate the contract, it will no longer be under any obligation to pay.

The Corona crisis does not result in the cancellation or limitation of existing cover.

For legal reasons, export credit guarantees may only be granted subject to payment of a premium that is commensurate with the risk. However, under certain conditions (particularly if collection of the premium would entail considerable hardship), a deferral of the premium may be possible. If necessary, requests for deferrals can be submitted informally and on a case-by-case basis.

Losses may occur either in the production phase or after delivery due to payment defaults. The Federal Government offers cover in both cases: manufacturing risk cover for losses in the manufacturing phase and supplier credit cover for a possible loss of receivables.

Euler Hermes is your first point of contact for all questions relating to export credit guarantees. Euler Hermes has been mandated by the Federal Government to process export credit guarantees
 Exporters who are interested in export credit guarantees or have questions of a fundamental nature regarding this instrument should contact the Advisory Service. The business consultant can be reached on the following phone number: 040 8834 9000 or by e-mail info@exportkreditgarantien.de.

In addition, Euler Hermes has set up a telephone hotline for exporters and banks. Dial 040 8834 9547 to ask experts questions on the options for cover and to discuss threatened or actual payment or settlement problems.
Companies and banks that have questions about existing cover should also contact the hotline.

Manufacturing risk cover primarily offers protection against the financial consequences of a production stoppage. If, as a result of a risk coming within the scope of manufacturing risk cover, it is impossible or at least unreasonable for you to continue manufacturing and/or to ship manufactured goods, indemnification is fundamentally available to cover the prime costs you incurred. This may be the case if, for example, your foreign customer is unlikely to feel bound by the contract due to the effects of the Corona virus. If you have manufacturing risk cover in place, it is important to inform the Federal Government’s mandatary, Euler Hermes AG, immediately of any delays in delivery and performance that may be required. Please note that such delays require the Federal Government’s consent.

Manufacturing risk cover primarily offers you protection against the financial consequences of a production stoppage. If, as a result of a risk coming within the scope of manufacturing risk cover, it is impossible or at least unreasonable for you to continue manufacturing and/or to ship manufactured goods as it must be expected that your foreign customer will no longer feel bound by the contract, indemnification is fundamentally available to cover the prime costs you incurred. 

Epidemics, pandemics, etc. are cases of force majeure that are not recognised as political causes of loss. 

The guarantees for commercial risks protect you in the event that continued production and/or shipment of the finished goods is no longer reasonable for you due to the insolvency of your foreign customer or a breach by the foreign customer of the contract, or if the foreign customer fails to pay the cancellation costs to which you are entitled in the event of ordinary termination of the contract.
 Please check whether and, in particular, from what point in time your foreign customer may terminate the contract with you on the basis of the provisions of the applicable contract and the applicable law. If your contract contains a force majeure clause, this usually gives rise to special termination rights. 

Please first of all check whether it is possible for you to find an amicable solution with your customer and, if necessary, to temporarily suspend or modify your delivery and service obligations depending on the situation. It is important for you to inform us immediately of any delays in delivery and performance that become necessary. Please note that these require our consent. 

Supplier credit cover protects you from the risk of your foreign customer failing to pay the amounts that it owes you provided that you are actually legally entitled to claim such amounts. Loss caused by the Corona virus may constitute force majeure and thus render the claim void. If you have taken out supplier credit cover, you must notify the Federal Government’s mandatary, Euler Hermes AG, immediately of any delays in delivery or performance and, of course, any delays in payment. Please remember that any postponement of delivery and performance periods requires the Federal Government’s consent. If you wish to obtain the components you require for delivery from another supplier in order to meet your own delivery obligations, please remember that you must obtain the Federal Government’s prior consent if these entail foreign deliveries (due to the change in the proportion of foreign content).

Supplier credit cover protects you from the risk of your foreign customer failing to pay amounts legally owing to you on account of the political and economic factors (political and commercial events of loss) coming within the scope of the cover. 

Epidemics, pandemics, etc. are cases of force majeure that are not recognised as political causes of loss. 

If the amounts owing to you under the contract are not paid by the foreign customer due to insolvency or as a result of any other inability or unwillingness to pay, you are protected by supplier credit cover provided that you actually have a legally valid claim to recover the amount owed.
 This is determined on the basis of the provisions of the contract and the applicable law. If your contract contains a force majeure clause, this usually gives rise to special termination rights which, if exercised, may prevent a legally valid claim for recovery of the amount in question from arising. 

You must inform us immediately of any postponements in delivery and performance. Please remember that such delays require our consent.

If you wish to obtain the components you require for delivery from another supplier in order to meet your own delivery obligations, please remember that you must obtain our prior consent in the case of foreign component deliveries (change in the proportion of foreign content).