EXIAR will be able to reinsure risks on trade loans

The Russian Agency for Export Credit and Investment Insurance (EXIAR, part of the Russian Export Center group) will be able to accept and transfer to reinsurance risks on trade loans issued to companies in the domestic Russian market. The rules for such activities are approved by government decree. This measure should increase the volume of insurance protection in conditions of limited reinsurance capabilities of Russian insurers. Until 2026, the agency can allocate 100 billion rubles for the tasks assigned to it. insurance capacity. The measure will be in demand, since the market capacity is limited, and the state reinsurer RNPK is not interested in this market segment, Kommersant was told at the All-Russian Union of Insurers.

The government has approved the rules for reinsurance of non-payment risks under contracts providing for deferment or installment payments for goods supplied, services provided, work performed and rights transferred to the results of intellectual activity in the Russian Federation. The Russian Agency for Insurance of Export Credits and Investments will deal with this over the next three years.

The agency received new powers to reinsure trade loans in the domestic market after the introduction of the corresponding article into Law 46-FZ of December 19, 2023. The explanatory note to the amendments stated that the measure is temporary and is “an anti-crisis solution in order to support the Russian economy.” Deputy Minister of Economy Alexey Khersontsev, when considering the bill in the State Duma, stated that the measure “will increase the volume of insurance protection for companies using deferred payment for goods and services for business” due to the fact that “in 2022, large foreign reinsurance companies left the Russian market and Small Russian insurers have become less able to share risks, and therefore less able to insure trade credits.” The total volume of the insurance portfolio allocated for trade loans almost immediately decreased by one and a half times, the deputy minister explained then. He said that EXIAR will allocate 100 billion rubles. insurance capacity until 2026 (it is assumed that this will happen at the expense of the agency’s own capital).

The adopted resolution describes the general provisions for concluding such contracts, and also states that EXIAR has the right to both accept and transfer risks (or parts thereof) to reinsurance. It is also indicated that reinsurance is subject to the rules for insuring export loans and investments against business and/or political risks of exporters, Russian investors investing outside the Russian Federation, and their foreign counterparties, as well as Russian and foreign banks lending to such transactions and organizations, providing guarantees. The norms of legislation on the organization of insurance business will not apply to such reinsurance.

The document stipulates that the reinsurance premium and reinsurance tariff under the contract must correspond to the reinsured risk (part of the risk) and the volume of coverage provided. The agency must determine the amount of the premium using the insurance rate established under the main insurance contract.

“The resolution gives EXIAR the right to accept and transfer risks to reinsurance. This is in demand because capacity is limited, and RNPK “does not rush” into this segment of the business,” the All-Russian Union of Insurers explained to Kommersant. There, however, they do not expect that the new measure will significantly affect the collections of this market, estimating them at 10–20 billion rubles.

Note that RNPK actually occupies a monopoly position in the Russian market after the departure of European reinsurers, but to cover credit and export risks, the Eurasian Reinsurance Company (EPC) is also being created. Its authorized capital will be 15 billion rubles, which, as EEC Trade Minister Andrei Slepnev stated at the Russian Business Week of the RSPP, will increase trade turnover within the union by $4 billion (the company should complement national export agencies). The possibility of increasing EPK capital will be discussed as the current resource is exhausted, Mr. Slepnev explained earlier in an interview with Kommersant (see Kommersant dated September 8, 2023).

Tatiana Edovina