There are no proposals to introduce a Government guaranteed export credit insurance scheme for Irish exporters to these countries. The Government's position on this issue has been informed by the findings of the 2009 report commissioned by my Department from KPMG consultants. That report established that the introduction of such a scheme would be expensive, with significant ongoing costs arising for the State. Annual costs in respect of quite a low level of intervention in the export credit market would be about €1.7 million, and this cost would rise significantly if higher risk profile exports were covered. In addition, it was found that such a scheme would be of very limited impact and that a negligible number of jobs could be connected with such an initiative.
Under EU state aid rules, any such state scheme is not normally permissible for short-term credit insurance. Most Irish exports fall into this category. A temporary derogation was established in 2009 due to the financial crisis at that time. That is now under review and is very unlikely to be maintained. Even under this current exemption, the specific provisions of any scheme must be approved by the European Commission. Approval would include a condition that the level of insurance premia to be paid by companies should be higher than rates provided in the open market. This is a considerable deterrent to business, and some of the schemes introduced by other member states had poor uptake for this reason.
In the intervening two years, there has been an improvement in the market for short-term export credit insurance. Insurers have recovered their capacity for risk and the market has recovered significantly, with both new entrants to the market and new products being offered. This has greatly improved the availability of export credit insurance on the commercial market.
The publication of the detailed KPMG report is not possible. The forensic analysis on the operation of the market for this type of insurance was only possible through the provision of sensitive, confidential data and detailed company specific information to KPMG. This information was provided to KPMG on the condition of strict confidentiality. Given the commercial sensitivity of this material and the limited number of companies in the market, both KPMG and the Department signed legally binding agreements with the insurers that the information provided would not be released.
Additional information not given on the floor of the House.
While the background research and analytical elements of the KPMG report cannot therefore be released, the key overall findings were publicised at the time and supported the view that a State supported scheme of short-term export credit insurance should not be introduced. This remains the position but will be kept under ongoing review, including in light of advice and evidence from the appropriate agencies and business representative groups. As the Government has a responsibility to ensure efficient use of scarce resources, a commitment of large-scale funding to an initiative with marginal benefits for Irish industry and high level risks to the State would be unwise.
