Hong Kong’s export credit insurer is keeping premiums low and expanding support for small and medium-sized enterprises (SMEs), even as geopolitical tensions in the Middle East raise concerns about risks to global trade.
Unlike the typical trade credit insurance model – where insurers raise premiums when geopolitical risks increase – the Hong Kong Export Credit Insurance Corporation (HKECIC) said it had continued offering concessions to exporters to help them weather uncertainty.
“In the conventional model of trade credit insurance when risks rise, insurers usually raise premiums and pass more of that risk on to policyholders, but we have instead continued offering concessions to companies,” said Terence Chiu Man-chung, commissioner of HKECIC.
Hong Kong’s direct exposure to the Middle East remained relatively small, limiting the immediate impact of the region’s tensions on local exporters, according to Agnes Chan Sui-kuen, chairwoman of the HKECIC Advisory Board.
“Hong Kong’s overall trade with the Middle East is only around 2.5 per cent, and shipments going there account for about 4 to 5.5 per cent of its total exports,” Chan said. “We have not received any complaints from clients about problems related to the Middle East.”
To support smaller exporters, HKECIC has been offering free pre-shipment risk cover for businesses with annual sales below HK$50 million. The coverage protects exporters if overseas buyers cancel orders before goods are shipped.
