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The largest insurer in the world of commercial lending Euler Hermes stopped to cover the risks for companies exporting to Greece. The same is done and Coface – the third largest player in the global insurance business commercial loans.
“Euler Hermes decided indefinitely not to insure supplies to Greece,” confirmed a spokesman for the company that is majority-owned German group Allianz. “Existing contracts will be met, but will not commit to new business in Greece,” added the spokesman.
Vincent Makkyu of insurance broker Marsh argues that the industry gradually limiting its exposure to the business of importers in Spain and Italy. Both countries have problems with debt, although not in immediate risk to leave the euro complements Makkyu.
Coming out of Greece in the euro area will force companies to switch to the drachma, which will probably be depreciated strongly against the European single currency. This means that importers will hardly pay invoices in euros, which in turn will cause potential suppliers from Europe damages. In turn, they would demand their insurers.
Euler Hermes has warned that it could restrict its activities in Greece, but the situation is carefully monitored by all who prepare plans to respond if, after the 17 June elections the new government in Athens itself in the hands of opponents of the deal for support from the International Monetary Fund and the European Union.
“This is a watershed – all waiting to see what happens. In Greece, burning and smoke and do not know if we quench the fire, or pour oil into the fire,” said Richard Tolboys of insurance broker Willis. According Makkyu withdrawal of insurance makes it more difficult for even the most stable Greek producers to obtain imported components and materials.
This type of insurance have been criticized for his actions during the crisis of 2008, when he suddenly stopped covering commercial risks that rocked supply chains and forcing several European governments to fill the hole with the opened state insurance schemes. In subsequent years they tried to build a good database for the partners of their clients in order to calculate more precisely the risks do not pay contracts.
In April, Germany triggered the same scheme again after the European Commission allowing all EU governments to take similar steps, said Gregor Wolf, head of foreign department of the German exporters’ association BGA. He said the state needs for insurance after a while the private sector does not cover enough risks.
Most operations within the EU and euro area are not insured – according to unofficial estimates by industry are doing about 15% of British and 25% of German exporters.
The IMF estimates that last year, Greece imported goods for 45.6 billion and exported to 20.2 billion euros. German imports were 5.1 billion – with 14% less than the previous year, according to the BGA. Because of the crisis rapidly declining domestic demand in Greece, over 20% of imported goods shops are closed and already felt the absence of import products from the supermarket shelves.