Export credit insurance can sometimes be a tough sell. "It may take two years to educate a company and put a program in place," says Robert Downey, a founder of Columbus, Ohio-based International Risk Consultants (IRC), largest of the U.S. specialty brokers in the field.

IRC expects to call on as many as 3,500 exporters this year, and hopes to place 250 policies in that universe of prospects. After 17 years in the business, he says this is "an exciting time." The market has been growing steadily for years, "but there's an awful lot of room for growth."

In Europe, where insurance protection against non-payment is deeply embedded, penetration was about 40 percent in 1987, but has recently grown to 55 percent. By contrast, in the United States, the 1987 number was 1-2 percent, and today it's in the 4-5 percent range, Downey figures.

Still, someone must be doing something right. Not only have the private insurers taken over the business from the Export-Import Bank, which pioneered the U.S. product, but exporters are now much more aware of its multiple advantages. That's why IRC likes to call on sales staffs, as well as finance and risk managers, when it goes prospecting.

Take Intcomex, in Miami, Florida, an exporter of computer components for such well known brands as Hewlett Packard, Intel, and Seagate. The company, in business since 1989, sells to overseas distributors in Latin America and the Caribbean, and has used credit insurance since 1994.

In recent years, Intcomex has been a client of Euler Hermes ACI, U.S. subsidiary of the Euler Hermes Group, a French-German insurer that is one of the three major European companies in the field (the others: Atradius Group in Amsterdam, COFACE Group in Paris).

Tony Shalom, Intcomex president, cites three reasons for using the program. First, "it helps our sales expansion, lets us offer attractive payment terms, replacing the need for letters of credit or payment in advance." Second is financing. "We need the insurance cover to arrange working capital, discounting our receivables." Intcomex assigns the insurance policy to its bank, transferring the protection, and giving the bank the comfort level it requires. And third, "we need to protect ourselves against country risk, since Latin America is a volatile region. If the economy blows up, we don't want to get hit too hard."

Here, the company relies on Euler's market intelligence as an early warning system. "We look to them for guidance; they can see trouble brewing before we can. It helped us to cut exposure in Argentina when the market was hit," Shalom explained.

Another example is Memphis-based Buckeye Technologies Inc., which has put together a sophisticated structure with Atradius Trade Credit Insurance, the U.S. arm of Atradius Group, to insure and sell its receivables, thereby maximizing its financial liquidity and improving the use of capital.

Buckeye Technologies, whose expertise in polymer chemistry underpins production of food casings, luxury stationery, and disposable diapers, exports about 65 percent of its $650 million in annual sales. The insured receivables serve as collateral for a revolving credit facility with Wachovia Bank. Significantly, the insurance covers 80-90 percent of the company's international receivables to support the credit line.

Providing credit insurance to tap the capital markets has been an innovative specialty of Atradius for the past four years. By insuring both domestic and international receivables, the quality of this collateral is enhanced, so banks and investors are willing to purchase the obligations.

The European trade credit insurers, such as Euler and Atradius, that have invaded the U.S. market in recent years have stressed a strategy that contrasts sharply with the historic American export credit insurance approach. Typically, the European strategy includes assessing the credit risk of each buyer covered in an exporter's business, adopting a credit ceiling, and then insuring the receivables generated within that ceiling.

In the traditional American style, the exporter is more responsible for its credit judgments. The insurer relies instead on its assessment of the exporter's credit management practices and know-how, and covers a portion of the risk up to a ceiling, based on that assessment.

But, the Europeans have also broadened the package. "Ours is a whole service," says Joe Ketzner, Executive Vice President at Euler Hermes ACI in Baltimore. "After we assess the risk, we then monitor it closely, and not only pay claims, but help the exporter work out its collections and recoveries," he stressed.

The European strategy is based on the development of huge global databases of company credit information, which supports the constant flow of underwriting decisions. Euler Hermes says it has 40 million automated files.

And, a lot of the decisions are done automatically. "We make 12,000 credit limit decisions a day globally," remarked Arjan Van de Wall, Vice President, Sales and Marketing at Atradius Trade Credit Insurance in Baltimore. Atradius has 3,600 staffers in 40 countries to keep up with market conditions and constantly refresh its data on local firms.

Meanwhile, the home-grown credit insurers are not sitting idly as these European transplants expand their U.S. market presence. Business keeps growing at FCIA Management in New York, Chubb & Son in Warren, New Jersey, Trade Underwriters Agency in Jericho, New York, and American International Group in New York, the U.S. contingent.

The U.S. underwriting style is built on the assumption that American credit managers are knowledgeable and sophisticated in their practices, and that what is needed is a sharing of risk to backstop the managers' judgment. Both sides agree that European credit managers are less sophisticated, so the European insurers have met their needs. But, they have shown that many U.S. exporters welcome them too.

And, the competing contingents also differ in their marketing strategies. The European-based insurers have built up their own in-house sales staffs who sell one underwriter's products, while the home-grown contingent relies largely on independent brokers.

But, there are now some signs of convergence. On the marketing side, in Baltimore, Arjan Van de Wall says Atradius uses both channels, "works with brokers extensively."

Too, while the Europeans prefer a "whole turnover" approach (insuring most, or all, buyers) even more than the Americans, a growing part of both contingents' business now covers "key accounts" (the most important buyers). Here, both strategies require that the overseas buyers are assessed in advance for their credit risk.

Plus, there is an emerging trend to share in risks, to co-insure among all these insurers, regardless of strategy, as the size of buyers' credit lines gets heftier. The need to increase capacity has led to underwriter syndications.

Neither side in this competition has much to sweat about. The U.S. is the largest exporter market in the world, and penetration is still modest. There's a lot of opportunity for all.