EXPORT CREDIT INSURANCE
Belgrade is hosting the Berne Union Annual General Meeting 2017. Berne Union is the oldest organisation which gathers 80 biggest state and privately-owned insurers of export receivables and foreign investments in the world. The host of the five-day long meeting is the AOFI, the state-owned export credit agency for insuring and financing of export. For the eleven years of its existence, the AOFI has insured 1 billion 600 thousand Euros worth of Serbian exporters receivables, but the AOFI states its capacity for insurance is much bigger.
Valjaonica Sevojno (Aluminium rolling mill in the town of Sevojno) has in the last four years been fortunate enough to insure its receivables and the AOFI paid its export debt on behalf of its foreign partners.
However, they say the most important thing is that they are able to receive from the AOFI the financial standings of all potential partners and advice up to which limit they can insure and sell goods with deferred payment, which has improved the company’s export.
“If a company becomes insolvent or there are other problems in collection of receivables, the AOFI pays us, in accordance with the contract, 80 to 90% of the insured amount, taking on itself the obligation to run a court proceeding and collect the subject receivables”, said Mr. Ninko Tešić, General Director of “Impol Seval”.
One court proceeding finished in Italy a few days ago, and the court ordered our agency AOFI be compensated for the amount used to cover the losses of a leather company from the town of Zrenjanin, accrued five years ago, when the renowned manufacturer “Paciotti”, for whom the subject company performed a part of jobs, went bankrupt. “Dafar” leather company still operates unlike the other three companies which used to work for the Italian partner but were not insured.
“What we have done in the last four years is to have attracted a larger number of clients, Serbian small and medium-size companies, and even entrepreneurs, to start using this product and so now we are insuring approximately two thousand five hundred foreign buyers for domestic companies” said Mr. Dejan Vukotić, the AOFI’s Director.
The insurance price depends on the country risk of the destination country, the volume of export and payment dates. In average, it costs an exporter from 0.2 to 1% of the worth of the export business. Exceptionally, there have been situations when the price was bigger although the destination country is not a risky one.
“We had certain problems when the EU imposed sanctions on Russia, our reinsurers refused to insure business deals in Russia and thus we had to raise the price”, Vukotić explained.
Out of the 13 billion Euro worth of Serbian export in the previous year, the AOFI insured 2.3%. The biggest compensations were paid out during the economic crisis, but only 123 thousand Euros in the previous year. The AOFI is more and more frequently placing a part of funds as loans for investments intended for export operations.