The role of insurance in international trade

The role of export credit insurance in international trade

Export credit insurance is a policy insurance that encourages domestic export enterprises to expand export trade and explore overseas markets, and bears the loss of foreign exchange collection for exporters and banks due to political risks in importing countries (including war, foreign exchange control, import control and deferred payment, etc.). ) and commercial risks of importers (including bankruptcy, default and rejection). It is a special policy and measure to provide risk protection for the rights and interests enjoyed by enterprises under export contracts, which is supported by the state finance. Its core content is to protect the legitimate rights and interests of export enterprises in economic activities such as export trade, foreign investment and foreign project contracting.

First, the history and present situation of export credit insurance

Government-supported export credit insurance first appeared in Britain in 19 19. At that time, in order to encourage domestic businessmen to export to Australia, Britain set up a special government agency "Export Credit Guarantee Agency" to provide commodity credit insurance and financing guarantee for exporters. In the modern sense, export credit insurance actually includes insurance and guarantee, and its role in promoting exports is mainly reflected in the following aspects: First, the whole process of export is fully guaranteed to reduce or transfer risks in trade, foreign exchange and settlement, so that the interests of exporters can be guaranteed from signing contracts to final settlement. Second, provide exporters with trade financing or project financing services. This function is realized by means of buyer's credit guarantee, project financing guarantee, fixed interest rate financing and guarantee insurance. Third, it provides opportunities for exporters to participate in large-scale export or international economic cooperation projects. This kind of project involves transnational procurement. In order to protect the interests of all parties, the countries concerned usually cooperate to underwrite the door or credit department of their respective countries on the basis of an insurance institution. Fourth, the development of internationalization and integration will help to reduce friction and ensure equal competition among exporters from all countries.

OECD countries, represented by Britain, France and Germany, reached the latest "gentleman's agreement" on export credit and credit insurance on 1 April 19981day, requiring that the credit conditions of each member country should not be higher than the "gentleman's agreement", otherwise other countries must be informed in advance to prevent unfair competition that harms the interests of the member countries concerned. It is this fairness and equality that makes export credit insurance recognized by WTO rules. According to WTO Agreement on Subsidies and Countervailing, export credit insurance is an exception to subsidies. Therefore, the role of export credit insurance in national support for exports is legal and unique. Accordingly, with the globalization of the world economy and the irreversible trend of trade liberalization, governments all over the world have changed their subsidy policy support for exports in the past and replaced it with indirect support accepted and widely adopted by the international community, in which export credit insurance plays an increasingly important role.

According to the statistics of the International Association of Credit and Investment Insurers (Berne Association for short), 65,438+02% of the global international trade volume is supported by export credit insurance, reaching 65,438+04% at the highest. In some countries such as Japan, France and South Korea, the proportion has reached 39%, 2 1% and 13%. The experience of Britain, France, Germany and other countries shows that officially supported export credit insurance has become an important means to expand the export of domestic capital goods, bulk goods and overseas investment, and the effect is very obvious. More than 20% of the above three countries' exports to developing countries are generally supported by export credit insurance. This enables their enterprises to enter and exit emerging markets with strong strength and high security with the support of the government.

Second, the role of export credit insurance in promoting foreign trade exports

1. Export credit insurance is beneficial for enterprises to prevent and control international trade risks and improve risk management level. The process of handling export credit insurance is a process of risk prevention and control. As the undertaker of risks, the most important daily work of export credit insurance institutions is information collection, processing and evaluation. In many years of business practice, export credit agencies have gradually formed their own information networks, accumulating a large number of political, economic, legal and other country information of different countries and credit information of buyers from various countries.

In the process of handling credit insurance for exporters, export credit agencies often provide all-round information services according to specific projects. Before underwriting, insurance institutions should conduct detailed credit investigation on both trading parties, fully understand the payment ability of both creditor and debtor, and provide sufficient evidence for evaluating the risk degree of export business. After underwriting, insurance institutions can also track the debtor's operating conditions in time. Once there is payment risk or credit risk, insurance institutions can make suggestions to export enterprises in time to control the risk within a certain range. After the completion of insurance business, insurance institutions can help enterprises to establish relatively complete customer files, provide information for enterprises to sum up experience, and comprehensively improve the risk awareness and risk management level of export enterprises. Therefore, export credit insurance not only provides security for expanding exports, but also enhances confidence and courage in earning foreign exchange through exports.

2. Export credit insurance is beneficial for export enterprises to adopt flexible trade settlement methods and expand exports. With the development of international trade and the intensification of competition, it is generally believed that the safer letter of credit settlement method has greatly affected the further expansion of exports because of its complicated procedures, strict examination and high cost. In order to simplify procedures, reduce capital occupation and save communication costs, buyers and sellers are increasingly using non-L/C payment and settlement methods, such as D/P, D/A and D/A, etc. According to statistics, the proportion of European and American enterprises using letters of credit has dropped to 10% ~ 20%. However, the evaluation of foreign buyers' credit risk involves not only the buyer's operating conditions, financial strength, credit degree and other factors, but also the political, legal and economic risks of the buyer's country. Therefore, it is difficult for more and more exporters to grasp the credit risks faced by their exports, and some export enterprises have lost many trade opportunities and even many old customers.

At present, the traditional letter of credit is the most important settlement method for most export enterprises in China. General companies are cautious about other settlement methods, such as D/P, D/A, 0/A, and have quite strict authority regulations, which are obviously at a disadvantage in the new international trade environment where the buyer's market is dominant and most customers have credit requirements. Using export credit insurance can fundamentally change this situation. It is precisely because export credit insurance bears the political risk of the buyer's country and the commercial credit risk of the buyer that the exporter is exempted from the economic losses suffered by the buyer's bankruptcy, rejection of goods and refusal to pay for goods, and the export income is also guaranteed to some extent, thus reducing the generation of overdue accounts and even bad debts. Under the guarantee of export credit insurance, exporters can meet new customers with confidence, open up new markets, expand business volume and promote the rapid development of export trade.

3. Export credit insurance is beneficial for export enterprises to obtain financing facilities and improve capital efficiency and competitiveness. The long-standing problems of export enterprises-shortage of funds and difficulty in financing-are the "bottlenecks" that restrict their accelerated development. Nationwide, the proportion of foreign trade enterprises' own funds is only about 15% on average, and their own scale is limited. In addition, international trade contracts take up a long time of funds, and it is usually difficult to meet the capital demand only by deposits or self-owned funds. Therefore, foreign trade enterprises need to borrow a lot of money from banks in order to develop and expand their business. Although banks are familiar with evaluating the value of domestic trade debts, they are usually at a loss about the safe value of foreign debts, which makes it difficult for exporters to finance foreign receivables. The export credit insurance can help banks to make credit decisions in trade financing: (1) directly guarantee the safety of foreign exchange collection of export enterprises and indirectly guarantee the safety of bank credit funds; (2) Whether to provide export credit insurance is beneficial for financing banks to choose export credit projects. According to the protection degree of export credit insurance, it is easy for banks to make decisions when considering the loan amount; (3) Banks can exchange risk information about foreign buyers and markets with export credit insurance institutions, thus saving the cost of risk investigation, speeding up decision-making and improving the competitiveness of banks.

Therefore, with the support of export credit insurance, the security of accounts receivable of export enterprises is ensured, the repayment ability is enhanced and the asset status is improved. Enterprises can transfer the rights and interests of export credit insurance to banks for financing, and banks have no choice but to look back, so the financing of accounts receivable becomes much more convenient, thus improving the capital efficiency and competitiveness of enterprises.

4. Export credit insurance can reduce and recover the direct losses of foreign trade enterprises in export trade through account recovery. With the development of China's foreign trade and economic cooperation, the arrears of international trade have also increased greatly. In order to expand the export scale and market share, export enterprises have adopted commercial credit settlement to export goods. However, due to the lack of credit risk management experience, the overdue accounts receivable of enterprises have greatly increased. According to statistics, the average bad debt rate of export enterprises in China is above 5%, which is much higher than the average level of 0.25% ~ 0.5% of western enterprises. When default occurs, export enterprises often cannot effectively recover from overseas because they don't understand the local legal system, practices and procedures and the language barrier. An important feature that distinguishes credit insurance from general commercial property insurance is the recoverability of compensation. During the operation of export credit insurance for more than ten years, China's export credit insurance institutions have accumulated valuable experience and rich information resources in account collection, initially trained a professional account collection team, and established cooperative relations with collection agencies in more than 30 countries and regions in the world. Through account collection, direct losses in trade can be reduced and recovered for export enterprises.

5. Export credit insurance is beneficial for the government to flexibly implement foreign trade and industrial policies, improve the export trade structure and promote the market diversification strategy. From the point of view that China's export credit insurance supports mechanical and electrical products and large-scale complete sets of equipment, the proportion of the total export of mechanical and electrical products has increased from 199 1 to 32.5% in 1997. This period is a crucial period for China to establish and improve its export credit insurance system. It is particularly worth mentioning that 1998, affected by the Asian financial crisis, China's export growth rate dropped sharply, but the export of mechanical and electrical products increased by 12.2% year-on-year, of which export credit insurance contributed a lot. In addition, China's foreign trade export market diversification strategy has made substantial progress in recent years, and it should be said that export credit insurance has played an important role. Insurance institutions can make professional assessment of their credit risks according to the political and economic conditions of various countries. At the same time, through information exchange with Berne Association and export credit insurance institutions in other countries, we can have a more comprehensive understanding of the risks and credit status of markets around the world, thus helping enterprises to explore new markets and develop new products in a targeted manner through consultation and other means, and promoting the development of diversification strategy of foreign trade export markets.

6. Export credit insurance is beneficial for enterprises to "go global" and carry out overseas investment. Implementing the "going out" strategy and encouraging qualified enterprises to invest abroad is of great significance to promoting economic development and safeguarding national security. Overseas investment insurance offered by export credit insurance institutions is a powerful policy tool for the government to encourage domestic enterprises to invest abroad, which is widely adopted by countries all over the world and can greatly promote the development of domestic and overseas investment. Different from general commercial insurance, overseas investment insurance is not for profit and has distinct policy characteristics. Its function is mainly to help enterprises transfer risks, promote financing, open up markets and strengthen risk management by underwriting the losses caused to investors by political risks such as expropriation, war, exchange restrictions and government default.

Overseas investment insurance includes equity insurance and loan insurance. Equity insurance covers the loss of investors' investment and vested income caused by the insured risk. Loan insurance is responsible for the losses caused by the insurance risks of the lender's loan principal and vested interests. Overseas investment insurance is a kind of guarantee insurance provided by the government, and its essence is a kind of "national guarantee" for overseas investors. It is not only implemented by the state-specific export credit insurance institutions, but also aimed at the business risks from state power that are not usually covered by commercial insurance.

Third, the development and prospect of China's export credit insurance

China's export credit insurance started at 1989. China People's Insurance Company officially started the export credit insurance business of mechanical and electrical products, and in the following years, it quickly promoted short-term export credit insurance nationwide, with the insurance market reaching more than 70 countries and regions, which opened up a new road for China's foreign trade export to improve its competitiveness. The Export-Import Bank of China was formally established on 1994, and carried out various businesses including export credit insurance, thus forming a situation that China People's Insurance Company and The Export-Import Bank of China Company jointly handle export credit insurance. 200165438+February 18 was approved by the State Council, and the export credit insurance businesses of the above two institutions were merged to form China Export Credit Insurance Corporation, becoming the only professional export credit insurance institution in China. The establishment of China Export Credit Insurance Corporation is an important measure for our government to deepen the reform of financial insurance and foreign trade system and increase the policy support for export trade under the new economic environment of China's accession to the World Trade Organization, which indicates that China's export credit insurance industry has entered a brand-new development period.

After 10 years of development, China's export credit insurance has accumulated from short-term export credit insurance to medium-and long-term export credit insurance and overseas investment insurance; From the formulation of policy terms and documents to the on-the-job training of business personnel; From national risk, buyer risk assessment and research to underwriting, such as information investigation, quota approval, indemnity processing and debt recovery. After joining the WTO, the export credit insurance business has achieved rapid growth, the market coverage has been continuously expanded, and the penetration index has been greatly improved. In the first half of 2003 alone, the export amount supported by export credit insurance exceeded $2 1 100 million, and the income from insurance business was 440 million yuan. Export enterprises obtained bank financing of $71300 million, equivalent to RMB 6 billion. Nearly three days after its establishment, China Export Credit Insurance Corporation paid a huge compensation of 33.28 million yuan to Dalian International, which became a timely rain for agricultural products export enterprises that suffered customs clearance losses in the "bird flu" incident in Japan, and recently provided overseas investment insurance and financing guarantee support of 654.38 billion US dollars for two engineering companies, Sinochem and Chengda, to invest in the Megaport Power Station project in Indonesia by way of BOOT. Export credit insurance plays an increasingly important role in supporting the development of export trade.

Governments at all levels in China attach great importance to the important role of export credit insurance in promoting foreign trade export. The former Ministry of Foreign Trade and Economic Cooperation and the Ministry of Finance jointly formulated the Measures for the Administration of Export Credit Insurance Support Development Funds. Many provinces, municipalities and autonomous regions have also formulated relevant support policies according to local conditions. For example, the Department of Foreign Trade and Economic Cooperation and the Department of Finance of Henan Province have jointly formulated the Interim Measures for the Administration of Special Support Funds for Export Credit Insurance in Henan Province, which stipulates that all enterprises that meet the prescribed conditions can receive special subsidies of 50% of the insurance amount that should be paid and actually paid. It is certain that with the support and guidance of the government and the joint efforts of China Export Credit Insurance Corporation and foreign trade enterprises, export credit insurance will play an increasingly obvious role in improving the competitiveness of foreign trade enterprises in the international market and preventing settlement risks.

Although China's export credit insurance industry has made some achievements, its development scale and level are still far from the requirements of the country and the needs of China's export trade. Small underwriting scale is the most important performance of the development of export credit insurance in China. At present, the export supported by China's export credit insurance accounts for about 2.7% of the total national general trade export in that year, which is far below the average level of 12% supported by Berne Association members. Formulate separate laws and regulations to standardize the policy export credit system; Continue to increase the publicity and marketing of export credit insurance; Establish a scientific risk analysis index system; Reform the interest rate mechanism and accelerate the marketization process of interest rate formation; Continuously expand the underwriting field; Strengthening the scientific management of export credit insurance business is an urgent problem to be solved in developing China's export credit insurance.

Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.