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Loss and Indemnification

Your invoice is still unpaid? Your foreign debtor is experiencing payment difficulties? If a loss is threatening, we will be pleased to assist you as competent partners. In order to guarantee a smooth cooperation in the claims processing, it is important that you contact us in good time. We will be pleased to advise you and discuss and agree the necessary steps with you.

If a loss is threatening, the following rules should, in any event, be adhered to:

  • Please report any risk-increasing circumstances (e.g. if the debtor is in arrears with a payment or asks for the extension of the repayment period) immediately to us in writing. Please let us also know what measures you have already taken and/or intend to take to assert your claims.
  • If you intend to make further deliveries to the foreign debtor, you will need the prior consent of the Federal Government.
  • Please initiate all due and reasonable measures to avoid or mitigate a loss. In doing so, please act with sound judgement and due commercial care.
  • Beabsichtigen Sie, weitere Versendungen an den Auslandsschuldner vorzunehmen, benötigen Sie die vorherige schriftliche Zustimmung des Bundes. 
  • Veranlassen Sie alle geeigneten Maßnahmen, um einen Schaden zu vermeiden bzw. den Schaden gering zu halten. Gehen Sie dabei nach dem Prinzip der kaufmännischen Sorgfaltspflicht vor.

Wenn Sie einen Entschädigungsantrag stellen, bewirkt dies meist, dass die Deckung gesperrt wird. Sie sollten daher prüfen, ob Sie mit Ihrem ausländischen Kunden nicht eine Rückzahlungsregelung (Prolongation) vereinbaren können. Diese bedarf i. d. R. der Zustimmung des Bundes.

When a claim is processed, a distinction is made between commercial and political losses. In the case of a commercial loss the reason for the default is related to foreign buyer.


A commercial loss can be caused for example by:

  • Events defined as insolvency, such as bankruptcy, a composition settlement in or out of court, unsuccessful judgement execution
  • Delay in payment for more than six months in connection with supplier credits or one month in connection with buyer credits, respectively (protracted default)

If you file a claim for indemnification, this will normally result in the suspension of cover. Therefore, you should check whether you can agree a repayment plan (extension of the repayment period) with your foreign buyer. As a rule, such an agreement requires the approval of the Federal Government.


If a commercial loss occurs, an indemnification by the Federal Government will be conditional on the following:

  • Existing Coverage 
  • Loss of the accounts receivable / collateral (if applicable)
  • Proof that a legally valid claim exists
  • Proof that an event of loss has occurred
  • Performance of the duties incumbent on the policyholder

Once the indemnification has been paid, the claim is transferred to the Federal Government up to the indemnified amount. Notwithstanding, the exporter remains bound to continue enforcing the claim for payment (including litigation) in accordance with the instructions of the Federal Government even after the payment of the indemnification. Where prior agreement has been obtained, the Federal Government shares the legal costs incurred. We will be pleased to assist you with choosing the institutions to be retained for enforcing the claim for payment.

In the case of a political loss the reason for the default is related to the country in which the foreign buyer is domiciled.


Characteristics of a political loss are:

  • General legislative or administrative acts (e.g. freezing of payments, payment moratorium, rescheduling agreements),
  • Warlike events, insurrection or revolution in the buyer’s country and 
  • Non-conversion, non-transfer

A political loss is deemed to have occurred if and when the Federal Government recognises the political event that led to the loss of receivables. In the case of warlike events the recognition by the Federal Government can often be obtained quite soon. More often than not, the loss is, however, caused by legislative or administrative measures. In such cases, it may take some time until a loss is recognised as political loss. In the meantime, the case is treated as a commercial loss.  

The majority of claims resulting from political events of loss are settled under a rescheduling agreement between the Federal Republic of Germany and the debtor country. At the latest when a multinational rescheduling agreement is signed, a loss will be recognised as a political loss.  

If you have any queries, please do not hesitate to contact our claims specialists so that your claim can be settled as soon as possible. 


More detailed information

In the series “Hermes Cover Special” brochures containing more in-depth information on the indemnification procedure and on duties have been published.

Ansprechpartner Schaden/Entschädigung

Dr. Ullrich Ehrenberg

Claims - Special cover, project finance and manufactoring risk cover

Nicola Kruse

Claims - Commercial Claims

Birgit Lauryn

Claims - Recovery 

Folko Wohlang

Claims - Restructuring