asked the Minister for Industry and Commerce, in respect of export credit insurance policies underwritten by his Department, the average amount of cover afforded by such a policy as a percentage of the contract value concerned.
Written Answers. - Export Credit Insurance.
51.
The amount of insurance cover afforded by an export credit insurance policy, as a percentage of contract value, can vary from policy to policy. The variation is governed by such factors as buyer risk, the experience of the exporter, the credit period and method of payment. With about 450 companies using the scheme resulting in approved credit limits for 20,000 buyers in about 130 markets, it would not be feasible to calculate an average amount of cover under all policies.
52.
asked the Minister for Industry and Commerce if, in respect of exports to Iraq, including beef exports, he will confirm that insurance cover under the export credit insurance scheme is based on the sale value of the goods to the customer in the country of final destination and not on the sale value to a subsidiary agency or distribution company based abroad for onward sale to the country of final destination; and if he will make a statement on the matter.
In respect of exports to Iraq including beef exports, the export credit insurance cover provided is based on the sale value of the goods to the customer in Iraq.
53.
asked the Minsiter for Industry and Commerce if he has satisfied himself that all beef exported to Iraq in 1987 and 1988, in respect of which export credit insurance was provided, was sourced in the State; and if he will make a statement on the matter.
In view of differences between figures for insured beef exports to Iraq and official trade statistics as published by the Central Statistics Office the Department has been and is continuing to examine the matter in consultation with the Central Statistics Office, Insurance Corporation of Ireland, the Department of Agriculture and Food and the exporters.
54.
asked the Minister for Industry and Commerce arising out of replies to Parliamentary Questions Nos. 56, 57, 58 and 59 of 20 April 1989, if he will reconcile his statement that insurance policies are issued on the basis of exporters' estimated turnover with his statement that insurance is only provided on the basis of irrevocable letters of credit which are drawn up for payment purposes; and if he will make a statement on the matter.
The previous statement that insurance policies are issued on the basis of exporters estimated turnover was made in the context of offering one possible general explanation for why there can be a difference between the insured value of exports generally and official trade statistics which are not compiled on the basis of insurance data. This remains valid. For example, in the case of comprehensive shipments policies, which are in place for about 90 per cent of exporters availing of the scheme, insurance is based on turnover estimates.
On the other hand the statement that insurance is only provided on the basis of irrevocable letters of credit which are drawn up for payment purposes was made in reply to a specific question about meat exports to Iraq for which the required terms of payment is on the basis of irrevocable letter of credit. Even where the latter requirement applies however payment will only arise where forecast shipments are realised. In other words a policy may be agreed for an estimated level of business even where ILCs are present but actual cover will arise only in respect of actual shipments and payments due thereunder.
55.
asked the Minister for Industry and Commerce, arising out of his replies to Parliamentary Questions Nos. 56, 57, 58 and 59 of 20 April 1989, the percentage of the total export credit insurance cover available for beef exports to Iraq in 1987 and 1988 which each of the two companies referred to obtains.
It would be inappropriate to specify the percentage of the total export credit insurance cover available for beef exports to Iraq in 1987 and 1988 which is held by individual companies. It has always been the practice not to divulge information pertaining to the operations of individual companies.
56.
asked the Minister for Industry and Commerce, arising out of his replies to Parliamentary Questions Nos. 56, 57, 58 and 59 of 20 April 1989, whether it confers an unfair advantage on an exporter to be given what amounts to an exclusive right to the available export credit insurance market for beef exports to Iraq on the basis of that exporter's estimated turnover for a particular year; and if he will make a statement on the matter.
In the general operation of export credit insurance, the matter of giving exclusive rights to cover or unfair advantages to any applicant or applicants does not arise. In fact a practicable approach to underwriting business is as far as possible adopted consistent with the desire to maximise export achievement which is the objective of the scheme. As already indicated in regard to beef exports to Iraq within the ceiling of cover available for the market, the first two companies to apply in 1987 had at the time of their applications firm contracts for the supply of beef to Iraq. At the same time, the total amount of insurance cover sought by these companies — when added to existing exposure on the market and allowing for a reasonable level of residual cover for industrial exports — reached the overall limit set for the market. Accordingly it was possible to facilitate only the first two applicant companies with export credit insurance in respect of their firm contracts.
This is still considered to have been the correct approach in the circumstances.
57.
asked the Minister for Industry and Commerce the overall limit which was set for the export credit insurance market in respect of (a) all exports and (b) beef exports to Iraq in 1987 and 1988; whether the cover available within these limits was fully taken up in each year; and if he will make a statement on the matter.
Under the Insurance Acts, 1909 to 1981, the maximum liability which the Minister could assume in 1987 in respect of all exports at any one time was £300 million. Under the Insurance (Export Guarantees) Act, 1988 this was increased to £500 million.
Beef exports to Iraq in 1987 and 1988 were subject to no specific limits but were subject to the overall limit imposed in respect of all exports to that market consistent with normal insurance prudence and practice. The overall limits are not annual limits but reflect the maximum liability which can be assumed in the market at any one time.
As regards all exports, the overall ceiling of £300 million was not reached in 1987 but as it seemed likely to be reached during 1988, the Insurance (Export Guarantees) Act of 1988 increasing the ceiling to £500 million was enacted. The new ceiling was not reached during 1988.