CREDIT INSURANCE IN A NUTSHELL

Export credit insurance is an instrument which allows companies to cover themselves against the risk of a client defaulting on its payments. Throughout the years, ONDD has time and time again revisited its classic role of credit insurer by expanding its range of products and services. In fact, credit insurance by ONDD now includes a series of solutions providing the necessary backing to companies and banks alike for transactions at home and abroad.


CREDIT INSURANCE. WHY?

Economic globalization opens new growth perspectives for companies and banks. Here, credit insurance is an undeniable asset for promoting international trade relations and exports. By building confidence between suppliers, buyers and banks, it is instrumental in building a country’s prosperity and employment. It is therefore no surprise that ONDD covers up to 40% or even more of Belgium’s exports to countries involving the highest risks.


EXPORTS ARE THE BACKBONE OF THE BELGIAN ECONOMY

More than 80% of Belgium's GDP is generated by exports. In addition to the positive effects of these exports on our balance of payments, the long-term impact on jobs and fiscal as well as parafiscal revenue is more than significant. In fact, a study has shown that 25 million Euros in exports generates some 11 million Euros in added value for the Belgian economy, along with employment for some 160 people for one year and almost 5 million Euros in fiscal and parafiscal revenue. The role for ONDD to play should not be underestimated. Some of the export transactions from the past which were highly essential for our country would never have taken place without credit insurance by ONDD. This is especially true for long-term transactions with non-OECD countries, involving a significant risk.


EXPORTING BEYOND OECD MARKETS EQUALS GROWTH

While the introduction of the Euro at the beginning of 1999 led to an acceleration of trade within Europe, the single currency has also increased the already keen competition between companies exporting beyond OECD markets. For these companies as well as for ONDD, it is no longer necessary to explain the importance of non-OECD markets, since these countries are generally characterized by:

> a large number of consumers;
> a higher economic and demographic growth rate than in Europe;
> the availability of raw materials, safeguarding their economic development.

Accordingly, exporting to these markets is becoming a necessity for any company that wishes to secure long-term growth while diversifying its risks in the best possible way.


EXPORTS: RISKY BUSINESS

Unfortunately, leaving familiar turf involves additional risks. This is especially the case for transactions involving long performance or payment terms or when the debtor’s country or the debtor himself is considered to pose a risk. ONDD, by the way, makes a distinction between commercial and political risks.

A company can be exposed to commercial risks: non-payment after a buyer's arbitrary decisions or bankruptcy. This risk, which is related to exports towards both faraway and nearby markets, can be aggravated by a political, economic, financial and legal environment which is less stable.

Moreover, exporting companies sometimes run a political risk, which is a risk mainly associated with emerging markets. The best-known political risks are coups d'état, wars and unpredictable government decisions. However, there are also political risks which are more insidious and more frequent, like political errors or external developments leading to general disruptions of economic and financial channels, such as foreign currency shortage, high public deficit, excessive foreign debt, currency devaluation, trade barriers and banking crises.


HOW CAN YOU PROTECT YOURSELF?

Since 1939, ONDD has helped you to avoid the pitfalls of commercial and political risks. We offer you an insurance covering your trade transactions and, where necessary, we will indemnify you for the cancellation of orders or non-payment of receivables. We can advise you when taking any first steps and help you to recover unpaid or even uninsured amounts. Since ONDD never takes any chances when considering cover of a transaction, the exporter or bank indirectly benefits from ONDD’s specialized credit analysis and risk assessment, especially when dealing with riskier debtors and markets.


WHO DOES ONDD SERVE?

Exporters

We do not restrict ourselves to covering large firms and large projects. Many of our clients are SMEs: trading companies, producers and sellers of consumer goods, manufacturers of standardized equipment and sellers of highly specialized services. Since small companies play an important role in exports, our strategy is especially geared towards reinforcing our support to them.

Investors

Belgian companies investing for their export business are not left to fend for themselves. ONDD indemnifies companies having made direct investments abroad and who are unable to retransfer to Belgium part or whole of the sums invested. Also, by acting as a guarantor with exporters’ banks, we can offer new financing perspectives to Belgian companies making investments at home with a view to export goods.

Banks

Banks, which often grant credits to suppliers or buyers, can call upon ONDD when they want to share the non-payment risk, in which case ONDD will assume a share of the risk under a risk participation scheme.