Short term credit insurance for marketable risks

Finnvera receives permission to guarantee short-term export transactions

The European Commission has granted Finnvera temporary permission to guarantee export transactions in EU Member States and in other Western industrialised countries when the payment term is under two years. The exporter must always first apply for insurance from a private provider of credit insurance.

According to the EU rules on State aid, Finnvera – as a public export credit agency – cannot insure risks that private insurance companies are able to insure in a normal market situation. Because the global financial and crisis that started in autumn 2008 has reduced the risk-taking capacity of private credit insurance companies, Finland filed an application with the European Commission for temporary permission to offset the market failure arisen in the provision of short-term credit insurance.

The permission given by the Commission applies to exports to EU Member States and other Western industrialised countries and is valid until 31 December 2010. Finnvera can only insure export transactions that private providers of credit insurance do not cover. The temporary permission includes traditional credit insurance meaning that only risks connected to buyers can be covered. The Decision of by the EU Commission does not allow Finnvera to cover bank risks in EU Member States and other Western industrialized countries, and therefore Finnvera cannot offer insurance in case the method of payment is Letter of Credit.

EU Member States and Western industrialised countries

Finnvera has temporary permission to guarantee export transactions with a payment period of under two years for the following countries:

• EU Member States (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom)
• Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, USA

Short-term export transaction – What to do?

As before, when the payment period is under two years, exporters primarily seek insurance cover for their export projects to the above countries from credit insurance companies operating in Finland.

Credit insurance companies’ contact data
Atradius Credit Insurance N.V.
www. atradius.fi
Credit insurance: tel. (09) 6811 2422
asiakaspalvelu.fi(at)atradius.com

Euler Hermes Luottovakuutus
www.eulerhermes.com/fi
Credit insurance: tel. 010 850 8500
info.fi(at)eulerhermes.com

If the credit insurance company is unable to provide cover for the export transaction, the exporter can apply for insurance cover from Finnvera. Before the application can be processed, the exporter must provide Finnvera with a report of a shortcoming in the availability of export credit insurance.

Applications for export credit guarantees are handled in Finnvera’s Unit for Export Financing in Helsinki. A filled in and signed application form is sent to:

Finnvera plc
Export Financing/Credit Insurance
P.O. Box 1010
00101 Helsinki

Terms, coverage and premiums

For whom
All export companies established in Finland may apply for Finnvera’s credit insurance

Coverage
In credit insurance for marketable risks, Finnvera’s coverage is primarily 80 per cent.

Premium
Usually the payment periods covered by credit insurance range from 30 to 180 days. In that case, the premium is from 0.3 to 1.0 per cent of the guaranteed exports. The final premium is determined on the basis of the buyer’s financial standing, the buyer’s operating environment, and the exporter’s experience of payments.

Risk assessment
Finnvera decides on granting a guarantee in accordance with its normal criteria. Finnvera cannot automatically cover all risks turned down by private providers of credit insurance. A guarantee application may be rejected, for instance, owing to the buyer’s history of considerable delays in meeting his payments or poor economic indicators.

Availability period
The guarantees can be used to cover export deliveries until the end of 2010.

Links:

Online Application (open a new web browser)