Global credit insurers, which promote smooth cross-border trade by insuring exports and imports, said on Friday that they urgently needed clarity on what measures eurozone politicians will take to solve the problems of debt-stricken nations and their banks.
Jim Davidson, president of the International Credit Insurance and Surety Association and a director at HCC International, said that for credit insurers to operate properly, eurozone politicians need to come up swiftly with a solution that would put "stability back in the process".
Speaking from the sidelines of the group's annual general meeting in Singapore, Mr Davidson and ICISA Executive Director, Robert Nijhout, said that the biggest issue for credit insurers right now is the "uncertainty about what circumstances we're in".
This makes risk assessment, risk sharing or risk pricing difficult to impossible, Mr Davidson said. He said the outcome of Greek elections on June 17 was less an issue for credit insurers than the fogginess still surrounding eurozone politics. A resolution to the election, either way, would mean credit insurers will know what they are dealing with and can react accordingly.
Mr Davidson added that in the current uncertain environment, banks cannot properly finance trade, which makes it difficult for credit insurers to follow through. He said there is much more risk involved with exports than for domestic trade and that credit insurers need to be cautious.
Credit export insurance insures that exporters are paid if their clients default. The loss of such cover can have a major impact on the willingness of companies to trade with the country involved.
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