EGAP and SME Support

Dear SME Exporters,

Your share in the Czech Republic’s total exports continues to mount. Research carried out by EGAP, together with the Association of Small and Medium-sized Enterprises and Crafts of the Czech Republic (AMSP), indicates that more than 30% of you export your products to countries outside the European Union. You are conquering world markets, but you underestimate the attendant risks.

The research showed that many of you believe EGAP only exists to serve large companies. No, we are here for you, too! We insure all exporters, regardless of their legal form, size or the extent of their financing. However, we do not encroach on the scope of services provided by commercial insurance companies, i.e. we do not insure credit with up to two years’ maturity if it is connected with exports to EU and OECD countries. On the other hand, we can help you mitigate risk in areas that commercial insurers cannot. We insure risks (both commercial and political) that the market is unable to cover.

We have prepared a package of products that you can draw on when you use EGAP services. This is a full range of services that can not only help you eliminate potential risks linked to customer default, but also protect you from other risks associated with non-EU exports, including political risks.

The products are designed to keep your administrative burden to a minimum while allowing your business transactions to be negotiated as quickly as possible.

We are holding a series of workshops across the Czech Republic, where we are prepared to provide prospective SME customers with all the information that they need about our products and services. The workshops are listed here.

Jan Procházka
Chairman of the Board of Directors and Chief Executive Officer,
Export Guarantee and Insurance Corporation (EGAP)

EGAP Extends Support to SMEs

After revising EGAP insurance products for SMEs, in 2014, EGAP prepared additional means to support this exporter segment. It teamed up with export-financing banks to organise a series of workshops on EGAP services and capabilities, attended by more than 1,500 business representatives and bank representatives this year.

Reinsurance Contract with KUPEG

Another SME product on offer is reinsurance contracting with the credit insurer KUPEG úvěrová pojišťovna. Reinsurance contracts make it simple for KUPEG to broker state-aided-claims insurance for clients under CREDIRECT, one of its standard insurance products. Jan Procházka, EGAP’s CEO, says that this will enable SMEs and commercial credit insurers alike to secure coverage even for risks not insurable on the market.

“The contract with EGAP was signed to guarantee our clients the highest possible insurance coverage for their commercial deals,” says Michal Veselý, CEO of KUPEG úvěrová pojišťovna, a.s. “There is no need to sign a special insurance contract. Instead, the only extra step is to enter into Special Terms and Conditions of Insurance with the client. Indemnity limits and any insured events are handled entirely electronically via KUPEG ONLINE. In this way, we are able to secure clients the highest possible indemnity limits on an arm’s-length basis,” adds Michal Veselý.

The cooperation between EGAP and KUPEG also means that, in exceptional circumstances, it is possible to insure claims intended for countries that are uninsurable for commercial insurance companies, but remain accessible to EGAP. These new opportunities are open to KUPEG clients, provided that at least 50% of the total value of their exports comprise Czech goods and services. EGAP stands ready to negotiate similar reinsurance contracts with other commercial credit insurers.

Increase in Limits for Insurance of Guarantees and Pre-export Credit

For projects up to CZK 20 million, it has long been the rule that if EGAP is approached by a bank that knows its exporter well, the insurance company will not run a risk analysis, but will use the bank’s rating for the company. Consequently, within two days, it is able to decide whether or not to insure a project. On the strength of an analysis of cases stretching back five years, where it transpired that transactions had gone ahead smoothly, the EGAP board of directors decided to increase the limits. When EGAP relies on a bank rating, then, the amount has risen from 20 to 40 million crowns (and where the limit was 30 million crowns, it is now 50 million).