Exporters’ association calls for action on credit insurance cover

THE Irish Exporters’ Association (IEA) has called for the Government to act swiftly to aid companies, reliant on the export of their goods, that are failing to attain credit insurance cover.

Although the Government does have plans to offer a state guarantee scheme to affected firms, the IEA is calling for an urgent implementation of the programme, as it is having an effect on firms’ cash flow requirements for their supply chains.

The main representative body for Ireland’s indigenous exporting companies has previously claimed that many companies are facing potential ruin because they are finding it harder to get credit insurance.

An estimated €9 billion worth of Irish exports are covered by credit insurance on a rolling six month basis, with a further €10bn, or so, worth of home-based trading covered.

IEA chief executive John Whelan said yesterday: “Hundreds of businesses have been affected by the gradual withdrawal of credit insurers from the high-risk export end of the market and increasing costs of insurance for all sectors, as underwriters try to re-coup insolvency losses.”

He added: “Insurance underwriters are facing a severe crisis as company insolvencies continue to grow. Hence, they are continuing to aggressively reduce cover and increase premiums.

“Furthermore, there is little alternative to credit insurance today, as banks have tightened the conditions to provide credit or guarantees to their clients. The bottom line is that for many exporters, cash flow for supply chain needs has reached crisis point and that jobs are increasingly at risk.”

The IEA claims 7,000 jobs have already been lost among exporters due to the problem and that another 12,000 are directly at risk.

Yesterday’s renewed plea came on the back of the European Commission approving — under its state aid rules — a measure proposed by the Finnish government to limit the impact of lessening credit insurance on export firms in its country.

In backing the Finnish programme, Competition Commissioner Neelie Kross said: “The export credit insurance scheme provides Finland with means of supporting firms in the areas where the market is temporarily not functioning properly while, at the same time, establishing safeguards to limit distortions of competition.”