ENG-1991 — Page 126

INDUSTRY AND TRADE

The Hong Kong Export Credit Insurance Corporation

The Hong Kong Export Credit Insurance Corporation (ECIC), a government-owned but operationally autonomous corporation that provides insurance to protect exporters against bad debts overseas, enjoyed substantial business growth in 1991. The primary factors stimulating this growth were strengthened marketing, improved awareness of the value of ECIC services, and recessionary conditions in major export markets that led more shippers to seek the corporation's protection.

During 1990–91, the ECIC wrote total insured business of $13,827 million and took in premiums amounting to $81 million, increases over 1988/1990 of 18 per cent and 17 per cent respectively. It paid out $18 million in claims, leaving $29 million as its surplus in the year 1990-91. The corporation worked hard in 1991 to further improve its services to exporters and manufacturers and to respond to changing circumstances locally and abroad. It signed up many new policyholders with growth potential who will improve the corporation's spread of risk.

The ECIC makes a practice of staying close to exporters and manufacturers so it is in touch with their needs. It holds seminars for banks, trade associations and individual exporters - in their offices if they wish. It works continually to improve its services emphasising speed and cost control. During the year, the ECIC tried out its new computerised system whereby, if no unfavourable information is spotted, credit limit applications on buyers in developed markets can usually be approved within 24 hours. This enables underwriters to put more time into studying large risks.

New data communication links were installed during the year giving the ECIC direct access to databases of credit information agencies overseas. Furthermore, senior executives travel abroad to seek information on political and economic developments and to maintain personal contacts that can be called on when policyholders' needs so require. The commissioner regularly attends meetings of the Berne Union, the world organisation that links all major export credit insurers.

On claims and recoveries, the corporation worked during the year to develop a more pragmatic and balanced approach to claims examination and recovery action. It stressed side-by-side support for policyholders with problems and further developed contacts with debt-collecting agencies abroad.

The corporation's paid-up capital of $20 million is provided by the government, which guarantees the payment of all moneys due by the corporation. The maximum contingent liability arising from its insurance and guarantees operations which may be assumed by the corporation is $7,500 million. It is autonomous in its day-to-day operations and is run on a commercial basis. It is assisted by a 12-member Advisory Board comprising prominent members of the private business sector and representatives from the government.

The ECIC's activities fall into three main categories. The most tangible is the protection provided by the corporation to indemnify policyholders up to 90 per cent of their losses. Besides domestic exports and re-exports, shipments from third countries direct to overseas buyers are also covered. Protection is provided to exporters against buyers' insolvency during manufacturing, against non-payment due to war and civil disturbance, or against confiscation and non-repatriation of raw materials, work-in-progress and finished products where goods are manufactured outside Hong Kong. For exports of capital goods and services sold on medium or long-term credits, the corporation can provide tailor-made insurance policies.

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