Establishment of New Export Insurance Program for Promotion of Overseas Business

On July 1, 2023, Nippon Export and Investment Insurance (NEXI) started a new export insurance program. In cases where Japanese companies that are intending to promote overseas business try to obtain loans from domestic financial institutions, NEXI will provide the institutions with loan insurance in order to contribute to the success of their business.

What is trade insurance?

Trade insurance is insurance which covers certain risks related to Japanese companies’ risks of overseas transactions, such as on exports, investments, and loans, which are not covered by private insurance. NEXI, a corporation wholly owned by the Japanese Government, is authorized to provide trade insurance. There are three major categories of trade insurance that NEXI provides: export insurance, investment insurance and loan insurance.

The new program will be applied to three important fields

NEXI, in principle, has to this point provided loan insurance* on loans offered to overseas companies. Recently, as the regulation for enforcement of the International Trade and Investment Insurance Act has been revised, NEXI is additionally authorized to provide loan insurance to  domestic financial institutions in cases where institutions will provide domestic loans to companies that intend to promote overseas businesses contributing to the following fields: [i] supply chain resilience, [ii] decarbonization and/or [iii] overseas business of startups.
 

*Note:

Loan insurance: This insurance covers losses suffered by a Japanese commercial bank or other financial institution as a result of providing loans. Losses may be incurred when the Japanese commercial bank or other financial institution are unable to receive repayment of the loan due to (i) war, revolution, prohibition of foreign currency exchange, suspension of remittance or force majeure such as natural disaster or (ii) bankruptcy or default of an importer.

NEXI started providing the insurance product on July 1, 2023

The revised regulation for enforcement of the International Trade and Investment Insurance Act came into force on July 1, 2023, and NEXI launched the new trade insurance on the same date.

Trade Finance Division, Trade and Economic Cooperation Bureau, METI