insurance of the unconfirmed L/C.
The export credit insurance, issued by a financial institution in your favour, protects you against non-payments by the buyer or by the Issuing Bank (in case of insuring an unconfirmed L/C) due to commercial (insolvency, fraud) or political risk. In case of non-payment, you will usually receive 80-90% of the debt.
The credit insurance not only guarantees you the payment, but also enables you to provide better terms to your buyers. Remember the dilemma between high and low risk payment terms? Well, credit insurance is the solution for this predicament.
The insured payment also allows you to obtain additional funds from a bank. Similar to the discounting of funds under confirmed L/C, your bank will usually provide you with trade finance and use your credit insurance as a security.