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Short-term Hermes Cover for EU and OECD member states available again

5 August 2009

  • Temporary solution for EU and OECD member states limited in time until the end of 2010
  • State support for the exporting industry extended
  • Strong demand expected

With immediate effect German exporters can again insure transactions on short credit terms with buyers in EU and OECD countries with Hermes Guarantees. The Federal Government applied to the European Commission for the permission to use the “Escape Clause” until the end of 2010 and received the Commission’s go-ahead on 05.08.2009.

The exporters can now use the existing export credit scheme to insure their short-term transactions (with credit periods of up to two years) with buyers from these countries. With its decision to permit state export cover for these countries again until the end of 2010 the European Commission satisfied an important demand of the exporting industry.

State export credit insurance is offered on the basis of the principle of subsidiarity only for those market segments for which private insurance companies provide insufficient cover facilities. Private export credit insurance will continue to have precedence over state export credit insurance. Therefore, state export credit insurance will only be granted for business for which the exporter cannot obtain the required cover from private insurance companies.

The Escape Clause will apply to all products of the Federal Export Credit Guarantee scheme with which transactions on short credit terms can be insured. The highest demand is, however, expected for Wholeturnover Policies and Wholeturnover Policies light under which several export transactions can be insured. All transactions for which cover is requested will be individually vetted and included in the insurance contract provided that the foreign buyer’s creditworthiness is sufficient. More detailed information can be found on the website www.agaportal.de.

The Federal Export Credit Guarantees (Hermes Cover) have been an important instrument of state export promotion in Germany since 1949. They protect exporters from bad debt losses arising from export business on short, medium and long credit terms. With about EUR 12 billion (2008) short-term cover accounts for more than half of the total cover granted. In short-term business wholeturnover and revolving cover are the most important forms of cover.

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