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Impact of Eurozone Recession on Credit Insurance Industry

Explore the effects of Eurozone recession on the credit insurance industry, regional breakdown of insured exports, demand shifts, risk classification changes, and mitigation strategies to navigate the European crisis.

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Impact of Eurozone Recession on Credit Insurance Industry

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  1. IMPACT OF EUROZONE RECESSION FOR THE CREDIT INSURANCE INDUSTRY Selin ÇALIŞKAN DeputyManager JOINT PAM/UNECE/UNCTAD CONFERENCE Geneva, 30-31 May 2013

  2. SHORT TERM EXPORT CREDIT INSURANCE • Initiated in 1989 • Provides commercial and political risk cover • Whole and some turnover policy • Coverage: 90% in principle • Maximum credit length: 360 days • 238 on-cover countries at present • Pre and post shipment coverage available • Premium rates set according to the seven-grade country risk classification, along with credit length, payment term and legal status of buyer • Operating profitably since its inception with reasonable loss ratios • Cooperation Agreements with 11 leading commercial banks

  3. SHORT TERM EXPORT CREDIT INSURANCE

  4. REGIONAL BREAKDOWN OF INSURED EXPORTS 2011 2012

  5. SECTORAL BREAKDOWN OF INSURED EXPORTS 2011 2012

  6. EFFECTS ON THE DEMAND OF CREDIT INSURANCE • Increase in covered shipment to EU countries and emerging markets

  7. EFFECTS ON THE DEMAND OF CREDIT INSURANCE • Decrease in share but not as significant as the percentage fall in Turkey’s export to EU countries

  8. EFFECTS ON THE DEMAND OF CREDIT INSURANCE • Increase in covered shipment to Mediterranean countries but decrease in share

  9. EFFECTS ON THE DEMAND OF CREDIT INSURANCE • Need for new potential markets instead of EU Countries • Higher awareness of the need for export credit insurance • Higher demand towards insurance

  10. INSURED EXPORTS (2007-2012)

  11. CLAIMS (2007-2012)

  12. EUROZONE-CLAIMS • 5 Buyers in “Top Ten Claims” belong to Eurozone countries. • 8 Buyers in “Top Ten Claims” belong to European countries. • Most of themarepaidduringtheEurozonerecession.

  13. EUROZONE INSURED EXPORTS-CLAIMS

  14. EURO-MEDITERRANEAN REGION

  15. IMPACT ON RISK CLASSIFICATION & PRICING • More cautious and conservative approach in underwriting • Change in cover conditions • Increase in premium rates in mostly affected European countries

  16. RISK MITIGATION STRATEGY AGAINST EUROPEAN CRISIS • Change in risk mitigation strategy • Monitoring the existing limits frequently • Utilizing other sources of information

  17. THANK YOU!

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