2007
Press Release
18.07.07
Major new initiative to assist
small business cover Export Risk –
The Irish Exporters Association launches a new guide to Export Credit Insurance with Euler Hermes and also announces new on-line, simplified Export Credit Insurance initiative for SMEs
The Irish Exporters Association’s (IEA), today (18th July), stated at its AGM lunch in Dublin that Irish exporters are not able to enter markets with the same level of assurance as their competitors in other OECD countries. In an effort to rectify that situation, the IEA today (18th July) launched a new publication “Export Credit Insurance - A Means to Better Exporting” and announced details of a new SME-specific export credit insurance initiative.
According to Mr Joe Lynch, President of the IEA, the publication and new product comes about following collaboration with Euler Hermes, the worldwide leader in credit insurance.
“The vast majority of our trading competitors within the OECD have state support in the form of low cost export credit insurance to assist their SME export sector tackle export market risks. This has put Irish exporters at a competitive disadvantage, particularly in emerging markets and when bidding for longer term contracts’’ stated Joe Lynch the IEA President, at the launch, and went on to say;
“Regrettably, in Ireland we threw out the baby with the bath water some years back when the state got its fingers burned in under-writing an export transaction covered by the state export credit insurance scheme which was in place at the time, and as a consequence withdrew totally from the market leaving exporters large and small to fend for themselves.”
“As a consequence a generation of smaller exporters have been denied the same level of risk cover at the same rates as in other OECD countries where the state has supported the private sector by underwriting the SME export insurance scheme’’
“Hence, I am delighted today to launch this private sector initiative with Euler Hermes.’’
Mr Lynch noted that the governments of many of the countries in the OECD underwrote export credit insurance initiatives to encourage the globalisation and export activities of small firms, who were at a disadvantage compared to large companies in getting cover for their export activities.
"Companies in these countries are major competitors for Irish firms and their governments’ underwriting of export credit insurance effectively makes the smaller Irish exporter less competitive in foreign markets,” said Mr Lynch. “In the absence of direct Irish Government underwriting of export credit insurance, I am happy to announce that the Irish Exporters Association, in collaboration with Euler Hermes, is offering an insurance initiative that is specifically aimed at the SME sector. It is hoped that the availability of such a product will create a stronger focus on the need for companies to use export credit insurance, especially when selling to markets where the economic and political situation may not be entirely stable.”
Mr Lynch concluded by saying that, in time, the Irish government might have a re-look at the situation and decide to underwrite an export credit insurance scheme specifically designed for the smaller firm. “Should such a development become reality I am sure that the result will mean that more SMEs will start to look at developing new, non-traditional markets in the full knowledge that they will be operating on a level playing pitch with their international competitors.”
Mr Paul Farrar, General Manager of Euler Hermes Ireland, said that his company was delighted to be joining forces with the Irish Exporters Association in developing these initiatives. He said publication of the guide was timely, given that Irish firms were facing uncertain times, driven by economic factors at home and abroad.
“With a slowdown expected in the US and pressures at home, Irish firms will have to look to new opportunities in emerging economies.
“Based on our experience - including that only 20 percent of firms take out credit insurance - an unprotected rush into new markets would expose Irish firms to unnecessary and significant risks.
“As an export-led nation, we need to build more certainty into our export potential if we are to realise the opportunities of these new markets. This includes fostering innovation, increasing local intelligence and mitigating the risks of insolvency. Euler Hermes’ business model supports Irish firms through our extensive analysis of risk worldwide, including in Ireland’s target markets.”
“We believe that information programmes, such as this guide being launched, combined with on-line fast track, simplified application procedures we are introducing to the market will encourage the smaller exporting company to avail of export credit insurance in its approach to develop new, non-traditional markets,” said Mr Farrar.
Ends
For further information contact: John Whelan
Telephone: 01 661 2182 – Fax 01 661 2315
Email: jfwhelan@irishexporters.ie
18/07/07
Addition Information for Press
The low level of Export Credit Insurance by Irish exporters as shown by the IEA’s EXPORT IRELAND 2006 Survey is not untypical of that associated with small exporters in other European countries and the USA. However, many of these countries have introduced a special Export Credit insurance scheme for small to medium sized companies, to address the perceived low utilization levels, the consequent high risk exposure and the longer term detrimental effects of potentially fewer small enterprises remaining active in export markets.
An OECD report shows that ‘Government in many countries, in conjunction with export credit agencies, have introduced, simplified application procedures and in many cases have devised export credit products for SMEs. Small exporters, who are usually less experienced and require more hand holding to guide them through an export credit system, generally have different needs than the larger companies.
The UK has introduced a rapid system for processing applications from exporters with smaller contracts under the “Export Insurance Policy” and the “Supplies Credit Financing” facility. Canada has implemented a “special small business accounts receivable insurance” policy, which is used by over half of all short-term insurance customers. “Emerging Exporters” underwriting is also available in Canada to small exporters through call centre and applications can be sent through the EDC website.
Germany, Hungary and Turkey are taking the needs of their SME exporters into account through simplification of application procedures, reduced paperwork and simpler language. Italy does not charge fees for small firms who apply for its export credit service.
There is clearly a need to introduce new initiatives into the Irish market to encourage more use, greater awareness and adoption of specially designed export credit insurance products for small exporters |
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