Export credit insurance

Export credit insurance was born in the aftermath of the First World War to support international trade in a context of high political risks and private market failure: the first public agency, the British ECGD, was founded in 1919, followed by Coface in France in 1946. The principle is to cover an exporter or its financing bank against the risk that the foreign buyer will not pay, either for a commercial reason such as insolvency, or for a political reason such as civil war, expropriation, exchange controls or a state decision to suspend payments. Public export credit agencies, grouped in the Berne Union, play a market-of-last-resort role for risks that the private sector is unwilling to take alone, notably transactions in high-risk countries or with tenors exceeding seven years. Private insurers such as Euler Hermes, Atradius and Coface cover short-term risks on solvent markets. The tension between the logic of public export support and WTO rules on subsidies led to the OECD Arrangement of 1978 setting minimum premiums and common conditions. With the rise of geopolitical tensions, supply chain fragmentation and economic sanctions, export credit insurance is regaining strategic centrality, with some states now using it as a foreign policy tool by adjusting guarantees according to destination.

A French turbine manufacturer signs a 200-million-euro contract with an energy company in sub-Saharan Africa, financed over eight years. The French bank refuses to finance without a public guarantee. Bpifrance Assurance Export guarantees 95% of the buyer credit against political and commercial non-payment risk. Eighteen months later, a coup d'état triggers a payment transfer freeze: the guarantee is activated, the creditor is indemnified, and the French state subrogates to recover the debt from the new government.

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