Inspite of high claims from exporters, state-owned Export Credit Guarantee Corporation of India (ECGC) has decided not to increase the premium rates on credit insurance policies.
ECGC holds more than 90 per cent market share in credit insurance, for which policies are bought to secure exporters from defaults, insolvency or bankruptcy among overseas buyers, or risks specific to the importing country, such as civil strife, import bans and curbs on remittances.
An insurer usually pays around 80 to 90 per cent of the receivables in such instances.
The crisis in the US economy caused major claims.
The highest claims were made on exports to the US, amounting to Rs. 110 crore and constituting 48 per cent of all claims paid.
For the year 2008-09, ECGC saw a 71 per cent rise in claims paid to exporters to Rs 230 crore compared to Rs 134 crore paid to exporters in 2007-08.
“Every exporter will be affected due to the continuing downturn, we expect 2,000 new exporters to buy cover from us in 2009-10. We are targeting 15 per cent growth in premium income. We have no plans to increase the premium rates this year as we want exports to be competitive,” said V Vishwanathan, General Manager, ECGC.
In 2008-09, Export Credit Guarantee Corporation of India collected a premium of Rs 745 crore from exporters and banks compared to a premium income of Rs 668 crore in 2007-08. Banks buy credit guarantee covers while exporters buy credit insurance covers. The claims paid to exporter and banks were Rs 451 crore in 2008-09 compared to Rs 420 crore in 2007-08.
The number of exporters who bought credit insurance cover from ECGC was 12,533 in 2007-08 which increased to 13,371 in 2008-09.
Vishwanathan said high claims were in industries including carpets, leather, coir, gems and jewellery, engineering goods, textiles, readymade garments, chemicals and pharmaceuticals and agricultural products.