Dáil Éireann Debate, Wednesday - 12 January 2011
883 Deputy Richard Bruton asked the Minister for Enterprise, Trade and Innovation if he has assessed the need for an export credit insurance scheme as a policy instrument for promoting trade; and if he will make a statement on the matter. [1423/11]
Amharc ar fhreagraThis issue has recently been thoroughly assessed by my Department. Following the difficulties being experienced by some companies seeking Export Credit Insurance in 2009, my predecessor, the Tánaiste Mary Coughlan TD, arranged that an independent forensic examination of the Export Credit Insurance market in Ireland should be carried out to establish the desirability and merits of a State-supported Export Credit Insurance Scheme.
This assessment, by international consultants KPMG, who also advise the UK Government on credit insurance issues, analysed a significant level of confidential and detailed company-specific information from the credit insurers. It was established that only a very small level of Irish exports are insured, that the existing cover is heavily concentrated on a single sector and a single market, that total withdrawals of cover (i.e. where the market decides that the risk is too great to provide any level of cover) was much more prevalent than reductions, that the introduction of a State ‘Top –up ‘ scheme, as has been sought for such reductions, would be expensive and of very limited impact, and that a negligible number of jobs would be supported by such an initiative. Significantly, the level of premia to be paid by companies under any such scheme, would, under EU State-Aid rules, be a multiple of regular premia and therefore very expensive for business. In addition, it was established that there were indications that this market was showing signs of recovery and that the insurance companies should therefore begin to provide better levels of cover. Accordingly the Government, based on the overwhelming weight of evidence in the KPMG report, decided that a State-supported scheme of short-term export credit insurance should not be introduced.
The KPMG report also recommended that my Department should consider the merits of introducing a State supported Medium-term Export Credit Insurance Scheme (where the risk period is over 2 years). This assessment was carried out last year and it was decided that, given the very small proportion of Irish exports coming within this definition, that establishing a scheme for such exports could not be justified.
My Department continues to keep the situation under review.
