Term
| Complexity of International Insurance |
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Definition
| One of the greatest concerns in international insurance is to make sure that the coverage selected for a shipment is the coverage that the shipper, whether the exporter or the importer, prefers. |
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Term
| Particularities of International Insurance |
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Definition
The number of coverage options is substantial.
Many of the risks are misunderstood.
The incoterms rules are somewhat misleading. Although both CIF(cost,insurance, and Freight) and CIP (carriage and insurance paid) both mention insurance, basic coverage.
The carriers offer very limited coverage. |
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Term
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Definition
| A loss incurred on an ocean voyage by a cargo owner. |
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Term
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Definition
| A loss incurred on an ocean voyage that is "genaral," in the sense that it involves all of the cargo owners on board. |
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Term
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Definition
| A particular loss incurred by a cargo owner on an ovean voyage; the cargo may have become wt from seawater or may have been damaged by rough seas. |
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Term
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Definition
| An act of disobedience or willful misconduct by the captain or the crew of a ship that causes damage to the or the cargo. |
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Term
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Definition
| The event that brings about a loss. |
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Term
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Definition
| A situation that increases the probability of a peril and therfore of a loss. |
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Term
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Definition
| The act of throwing overboard part of the cargo of a ship(or the fuel of an airplane) in an attempt to lighten the ship. |
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Term
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Definition
| The chance or the probability of a loss. |
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Term
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Definition
| The chance or probability of a loss as well as the chance or probability of a gain.Not insurable. |
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Term
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Definition
| The chance or the probability of a loss only. insurable. |
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Term
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Definition
| The chance of a loss that can be accurately calculated, because ample empirical data are available (fire causing loss) |
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Term
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Definition
| The precieved risk of a loss by an individual or company. |
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Term
| Perils Faced by International Shipments |
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Definition
| When goods are in transit internationally, they face a great number of perils and hazards, simply because they are handled by the multiple carriers involved in the pre-carriage (the portion of the trip in the exporting country),the main carriage(the international portion of the voyage), and the on-carriage(the portion in the importing country. |
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Term
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Definition
| Cargo theft is a concern for companies shipping internationally. |
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Term
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Definition
| An opportunity theft of part of a cargo shipment. |
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Term
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Definition
| Theft of a cargo shipment by a group of organized criminals. |
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Term
| Cargo theft can be classified in 3 basic ways |
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Definition
| Pilferage, organized theft, and system's theft |
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Term
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Definition
| Theft perpetrated by someone with access to the shipper;s or carrier's computers. |
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Term
| Perils Faced in Ocean Transportation |
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Definition
| An ocean shipment is subject to a large number of risks, most of which are only vaguely familiar to a land-based exporter accustomed to shipping by truck or rail to its domestic customers. |
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Term
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Definition
| The fact that cargo transported internationally will be subjected to several changes of mode of transportation, and to vibrations,jolts,drops, and side-to-side movements during an ocean voyage. |
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Term
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Definition
| 30 degrees from side to side (roll) and 10 degrees front to back (pitch). These regular movements are accompanied by drops (heave) that can reach 10 meters(30 feet), as well as brief movements forward (surge) or sideways (sway) that end in a violent shock when the ship hits another wave. |
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Term
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Definition
| cargo movement, water damage, fire, sinking and stranding, piracy, theft, collision, and several more. |
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Term
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Definition
| A permanent cover over the ship's hull. |
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Term
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Definition
| The humility that condenses on the inside walls of a container and on its cargo. |
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Term
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Definition
| Loss overboard in a storm. |
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Term
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Definition
| A stack of containers placed on deck that collapses in heavy seas. |
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Term
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Definition
| The act of throwing cargo overboard to save the ship and the remainder of the cargo. |
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Term
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Definition
| Fire is also fairly significant peril of shipping by ocean cargo containers. |
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Term
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Definition
| In a sinking, a ship is damaged, no longer floats, and goes to the bottom of the sea. |
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Term
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Definition
| On November 24, 1997, the containership MSC Carla was traveling from Le Havre, France, to Boston. |
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Term
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Definition
| In a stranding, a ship runs into high ground and can no longer move. |
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Term
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Definition
Assume a bulk cargo ship, valued at $1,070,000 losses power to its rudder and becomes stranded in shallow waters.
1st the adjuster calculates the market value of the jettisoned cargo. |
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Term
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Definition
The company shipping the iron ore cargo has a liability of $100,000 X 6%=$6,000.
The company shipping the coal has a liability of $80,000 X 6 %=$4,800
The company owning the ship has a liability of $1,070,000X 6%=$64,200 |
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Term
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Definition
| A violent overtaking of a ship and its crew. |
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Term
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Definition
Numerous other risks exist in shipping by sea: The risk of collision at sea is not substantial but is still present.
There is also the risk of collision with non-vessels; floating or sunken containers or debris are present in shipping lanes.
other collisons, risk of cargo contamination affected by other cargo, other cargo on board can be a hindrance to a shipper. For some ships sailing out of improvised countries, another increasing problem is stowaways. |
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Term
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Definition
| A person who hides onboard a ship and travels to the ship's destination. |
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Term
| Perils Associated with Air Shipments |
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Definition
| The risk of total loss of cargo due to aircraft crashes is essentially nil, as is the risk of loss while the aircraft is aloft. |
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Term
| Perils Associated with Air Shipments |
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Definition
| Cargo movement,theft and pilferage,exposure to inclement weather |
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Term
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Definition
| A partly who would experience a financial loss in the case of a peril is said to have an insurable interest. |
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Term
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Definition
Foreign exchange exposure: A exporter in a developing country sells to an importer in a developed country on a CIF basis.
Trust: An exporter may sell FCA to an importer in a country that mandates that the importer buy insurance in the importing country.
Insufficient coverage: An exporter agrees to sell to an importer on a CIF basis.maximum coverage. |
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Term
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Definition
| 3 ways to manage risks: It can retain the risk, transfer the risk, or take a mixed approach, retaining some risks and transferring others. |
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Term
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Definition
| A risk management strategy in which a company decides to retain a risk and not insure against it. |
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Term
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Definition
very large international traders-importers or exporters
Exporters or importers that have little exposure.
Exporters or importers that have little relative exposure.
Firms that did not evaluate the international transactions risks clearly. |
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Term
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Definition
Firms with a lot of exposure.
Firms with a relatively high exposure.
Firms with little experience.
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Term
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Definition
| A risk management strategy in which the company decides to insure against its risks. |
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Term
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Definition
| The impact of a loss for an exporter. Its effect on the exporter's financial well-being. |
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Term
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Definition
is implemented with the use of a deductible.
is implemented with the use of a franchise.
The decision is made based on the types of risks that the firm is willing to take, and those that would rather transfer to an insurance company.
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Term
| Purchasing Marine Cargo Insurance |
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Definition
Open policy
Special Cargo Policy
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Term
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Definition
| An insurance policy that covers all of the covers all of the shipmets made by a firm. |
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Term
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Definition
| An insurances policy that covers pme shipment. |
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Term
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Definition
| A certificate, issued by the exporter's insurance company, that attests that a particular shipment is insured. |
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Term
| Marine Cargo Insurance Intermediaries |
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Definition
An insurance agent, who can assist the firm in obtaining the most appropriate coverage
A freight forwarder, who can provide "generic" coverage for a given shipment almost immediately. |
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Term
| Marine Cargo Insurance Policy Coverage |
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Definition
| 5 specific risks, against which it is impossible to find insurance: improper packaging, inherent vice,Ordinary leakage, and Unseaworthy vessel, nuclear war. |
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Term
| Institute Marine Cargo Clauses |
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Definition
| Coverage A,B,C,All-Risks Coverage,With-Average Coverage,Free-of-Particular-Average Coverage, Strikes Coverage, War and Seizure Coverage |
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Term
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Definition
| all risks of loss of damage to the subject-manner insured. |
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Term
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Definition
| Is an older type of policy.It is a much less frequently used policy, except in united states. |
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Term
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Definition
| named-perils policy, as it lists specifically the risks that it will cover. |
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Term
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Definition
| Named-perils policy, and it lists specifically the risks that it will cover. Fire, stranding,sinking,collision, and jettison. |
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Term
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Definition
| Include coverage in between an all-risks policy and policy with coverage B of the institute Marine Cargo Clauses. |
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Term
| Free-of-Particular-Average Coverage |
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Definition
| The last general policy is referred to as a free-of-particular-average policy covers total losses, but covers only partial losses in a few circumstances. |
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Term
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Definition
| A partial loss incurred by a cargo owner on an oceandd voyage. |
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Term
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Definition
| excludes coverage of damage to cargo due to strikes and other civil disturbances. |
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Term
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Definition
| Excludes damage to cargo due to war and war-like situations, such as the seizure of a ship by a foreign government or the accidental collision of a ship with a mine. |
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Term
| Warehouse-to-Warehouse Coverage |
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Definition
| Coverage to an open cargo policy is the warehouse-to-warehouse coverage, which covers the goods. |
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Term
| other clause of a Marine Insurance Policy |
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Definition
General average clause
Constructive Total Loss Coverage Clause
Sue and Labor
Inchmaree Clause |
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Term
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Definition
| A policy contracted by the ship owner to cover damages to the ship. |
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Term
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Definition
| A company whose business is to determine the seaworthiness of a vessel. |
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Term
| Property and Indemnity Club |
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Definition
| A group of ship owners who agree to mutually share the costs of its members liabilities to other parties. |
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Term
| Elements of an Airfreight Policy |
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Definition
Improper packing
inherent vice
ordinary leakage
unairworthy aircraft
nuclear war |
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Term
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Definition
| An independent company that investigates damage to shipments on behalf of insurance companies. |
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Term
| commercial credit insurance |
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Definition
A sale to a foreign customer on an open-account basis.
A sale to a foreign customer on credit terms.
A construction firm retained by a foreign customer to build a plant. |
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Term
Political risk
Commercial risk |
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Definition
This is the risk presented by the country by the country in which the transaction takes place.
This is the risk presented by the customer defaulting on its obligation to pay, for whatever reason. |
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Term
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Definition
| Export-Import Bank was created as an independent government agency in 1934. |
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Term
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Definition
| The Overseas Private Investment Corporation is also a governmental agency, created in 1971 with the purpose of encouraging private investments in developing countries. |
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Term
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Definition
| The Small Business Administration has created two programs designed to help exporters finance their sales abroad |
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Term
| Private Insurance Companies |
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Definition
| FCIA The Foreign Credit Insurance Association was created in 1961, primarily to offer products that combined the Ex-Im Bank's political and commercial credit insurance products. |
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Term
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Definition
| American Credit Indemnity is the other large player in the field, offering a similar array of commercial credit insurance products. |
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Term
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Definition
| Certain Lloyd's syndicates have added coverage of political risks to their underwritingn porfolio and present the advantage of offering insurance for countries |
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