EGFI Building Ties to Insurance Firms to Cover Export Risks
EghtesadOnline: The Export Guarantee Fund of Iran is collaborating with insurance companies to expand risk coverage for export companies, the EGFI chief said.
Outlining the new strategy of Iran’s main export credit agency, Afrouz Bahrami underlined the need to form an insurance consortium for better management of macro risks emanating from exports, according to Financial Tribune.
Bahrami made the statements on the sidelines of a meeting to sign a memorandum of understanding with Hafez Insurance Company. The insurer provides coverage mainly to businesses in the free and special economic zones.
The MoU was signed to facilitate “export-oriented investment” in the free and special economic zones, the EGFI website reported.
Mahmound Dodangeh, managing director of Hafez Insurance, said the MoU will seek to “design a comprehensive insurance package for exports”.
Pointing to insurers’ aversion in the past to cover credit risks, Bahrami expressed EGFI’s readiness to help devise new insurance tools for improving the safety of exports in collaboration with commercial insurance companies.
She described domestic credit insurance coverage as the “missing loop” in the insurance industry, saying the EGFI will share with commercial insurers its experience and expertise in covering credit and export risks.
EGFI is a state-owned body with a mandate to promote Iran’s non-oil export by providing local companies export guarantees and insurance to cover risks in and emanating from exports.
The fund is capable of providing cover for export risk to the tune of $2.3 billion – or 5% of Iran’s $40 billion non-oil export market.
As per the EGFI’s recent reports, the agency covered non-oil exports worth $1 billion in the first five months of the current fiscal year that ends in March, posting 60% growth compared to the similar period last year.
While Iran is grappling with tough US economic sanctions on its oil export and despite the dire need to increase non-oil exports, its export credit agency has a capital worth $100 million, hardly accounting for 2% of the value of the total non-oil export.
However, the EGFI is set to increase its capital by €100 million in the fiscal March 2020-21 budget.
This will raise the fund's capital to a little less than €200 million, while EGFI’s minimum capital is expected to be equal to 1% of the total export," Bahrami said earlier.
"Given the total non-oil exports, EGFI's capital should be increased to €500 million to be able to meet international norms,” IRNA quoted her as saying.