Topi Vesteri to continue as Chair of the MLT Committee of the Berne Union
Topi Vesteri, Executive Vice President of Finnvera, was re-elected Chair of the Medium/Long Term Committee of the Berne Union. The Berne Union is an international organisation for providers of insurance against credit risks and political risks. The committee chaired by Vesteri comprises 33 public-sector insurance institutions; their total commitments exceed USD 500 billion.
The Short Term Committee will be chaired by Beatriz Reguero, a member of the executive of CESCE in Spain, while the Investment Committee will be chaired by Director Joanne Palmer of Export Development Canada (EDC).
Angus Armour, Managing Director & CEO of EFIC Australia, was elected for his second term as President of the Berne Union. Daniel Riordan, President, Specialty Products, of Zurich North America, was elected Vice President.
Insurance arrangements provided by the members of the Berne Union annually cover about ten per cent of the total volume of world trade. “Insurance is typically granted for risks that exporters or banks do not want or are unable to bear themselves,” Topi Vesteri explains.
Aftermath of the financial crisis
The financial market crisis raised the global volume of insurance to a new record in 2009. Demand for insurance levelled off in January–September 2010, as the private financial market began to assume a more active role. This year, however, the volume of insurance is still expected to exceed the level of 2008 and to reach very close to the record volume of 2009.
The volume of short-term credit insurance for trade in goods fell in 2009 as some private providers of credit insurance withdrew from the market. Owing to the crisis, Finland and many other countries sought temporary permission from the EU to insure short-term transactions to Western industrialised countries. This permission is valid until the end of the current year, but Finland has requested an extension of the right to grant this type of insurance.
Public-sector insurance institutions have worked actively to offset the market failure that has arisen in short-term credit insurance. Alongside the crisis, their share of the market rose from the average of 15% in 2005–2008 to 28% in 2009. Claims paid for short-term credit insurance in 2009 exceeded 2.1 billion dollars and claims expenditure amounted to 81% of the premium income for credit insurance. “These risks make it easy to understand why private providers of credit insurance withdrew from the market,” says Topi Vesteri. “Even so, public-sector providers of insurance have not yet suffered any major losses because of this.”
The claims expenditure of public-sector providers of insurance tripled during the financial crisis, to over three billion dollars. Before the crisis in 2008, claims, at about one billion dollars, had been record low. Topi Vesteri points out that the premium income still clearly exceeded the claims expenditure. In terms of guarantees, the biggest commitments pertained to exports to the United States and Russia. “The same applies to Finnvera’s guarantees,” Vesteri says. “Besides Finnvera, the export credit institutions of Germany, Italy and France have guaranteed cruise vessel deliveries to the United States. Investments in other sectors in the United States have also involved major buyer credits covered by export credit guarantees.”
Additional information: Tuukka Andersen, tel. +358 20 460 7351
