MUSCAT: Credit Oman has launched an insurance policy to protect Omani manufacturers against losses on advance payments to domestic and overseas suppliers, extending its coverage to the pre-shipment stage of production.
The Advance Payment Insurance Policy covers upfront payments for raw materials, intermediate goods and capital equipment used to manufacture products for domestic and export markets.
Such payments are often required when suppliers need time to manufacture or assemble machinery, prepare equipment or secure raw materials before delivery. Contracts can run for several months, exposing manufacturers to losses if suppliers become insolvent or fail to fulfil their obligations.
Credit Oman said the policy would indemnify insured manufacturers when a supplier failed to deliver contracted goods and subsequently failed to refund the advance payment because of insolvency, non-payment following non-delivery or specified political risks in the supplier’s country.
Where a bank finances the advance payment, coverage may be extended through a loss-payee endorsement in favour of the lender. This allows the financing institution to receive an insurance payment under the agreed policy terms and could support manufacturers’ access to funding.
Haitham bin Abdullah al Yaqoobi, Acting Chief Executive Officer of Credit Oman, said the product was intended to protect manufacturers against commercial risks that could disrupt production and expansion.
He said the policy had been developed around the requirements of businesses in Oman and could give companies greater confidence when making procurement and contracting decisions.
Protection against supplier insolvency or default could reduce financial losses, support business continuity and help manufacturers enter new contracts and projects, he said.
Al Yaqoobi said stronger protection for imported production inputs could also support domestic manufacturing and create opportunities for industrial growth and non-oil exports.
Credit Oman said the policy formed part of its broader work to strengthen risk management across industrial supply chains, including purchases of raw materials, production equipment and other inputs required by Omani manufacturers.
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