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|Reviewing the Features of its Various Policies||By A Special Correspondent|
In the aftermath of the global meltdown, Europe has shown a negative growth in 2012 and USA, a moderate growth.
The global economies continued to suffer in terms of GDP growth, balance of trade, unemployment, etc. Despite the fact that international trade encountered volatile risks, world over, the ECAs have played a significant role in promoting cross border trade cautiously by supporting their clientele. Many ECAs revamped their products and introduced new products to suit the requirements of the exporters.
During 2012, Berne Union members have insured more than 10% of world exports. Though the level of claims continues to be low presently, it is expected to burgeon in 2013, due to higher insolvency rates in Europe and North America. ECAs, the world over, expect to encounter more difficult times ahead with the continuing stress in markets around the globe and the increased political risks in many parts of the world. However, the global crisis has sharply focused on the importance of Credit Insurance as a risk mitigation tool in cross border trade. ECAs continue to face the challenges in terms of access to credit information on overseas buyers, availability of reinsurance, pricing and related issues.
International trade continued to suffer in the recent past. It is expected that the US market conditions may improve during the current fiscal. However, the risk environment is expected to remain volatile in the near future due to the prevailing economic situation. The Middle East and the North African region (MENA) continue to be a concern due to political disturbances. The volume of world trade increased by 2% over the previous year, whereas as a group, the developing nations have increased their share in international trade over the last year, however, the share of developed nations continues to show a declining trend.
Global trade, although projected to pick up in 2013, may continue to remain at a modest level. The Export sector constitutes around 15% of India’s GDP. The country’s merchandise exports stood at USD 301 bn against USD 305 bn the previous year, showing a negative growth of 1.31%, in dollar terms. in 2012-13, were engineering goods, man-made textiles and readymade garments. The share of exports to the European Union and to the North America declined by 4% and 2% respectively during this fiscal. India’s exports to ASEAN countries fell by nearly 12% during the financial year which is a matter of concern. The pattern of India’s merchandise trade is undergoing a structural shift to Asia, Africa and Latin America, away from the traditional markets. The efforts being taken by the Government of India, by entering into FTA arrangements, are directed at common interest and logistic advantages. It is projected that the country may achieve a 10% growth in exports over the previous year, to reach the target of USD 330 bn.
During the FY 2012-13, ECGC earned a total income of ‘1,555 crores, registering a growth of 14% over the previous year. The gross premium collection of the Company stood at ‘1,157 crores for the year registering a growth of 15.16% over the previous financial year. The cumulative increase in premium income for the past two years was ‘ 272 crores, showing a growth of 31% over the FY 2010-11 level of ‘ 885 crores. Income from investments increased to ‘ 398 crores, showing a growth of 12.43% during the FY 2012-13, with a yield at 8.85% p.a. as compared to 8.69% p.a during the previous financial year.
During FY 2012-13, Canara Bank had opted for Whole Turnover Post Shipment cover and four associates of State Bank of India had opted for both Pre-shipment and Post-shipment covers, on Whole Turnover basis, under the scheme of Export Credit Insurance to Banks (ECIB).
Premium income during the FY 2012-13 under Short Term ECIB was ‘ 751.72 crores, showing a growth of 24.91% over the previous year.
ECGC posted Profit After Tax of ‘243.20 crores for the FY 2012-13 compared to ‘ 225.21 crores during the FY 2011-12. The dividend payout for FY 2012-13 is proposed at ‘ 60 crores.
ECGC has been reviewing the features of its various Policies with the support of the Appointed Actuary (AA) and registering the revised products with IRDA. ECGC has strengthened the customers’ grievance redressal mechanism with a three stage appeal procedure, further capped with an internal Apex Customer Grievance Committee headed by the Chairman-cum-Managing Director (CMD). An Independent Review Committee comprising external experts has also been constituted to address complaints from the policy holders.
The company holds regular meetings of the Audit Committee, Investment Committee, Risk Management Committee and Policyholders’ Protection Committee of the Board of Directors.
During the FY 2012-13, ECGC organized the first Commencement Day commemorative lecture by Dr. C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, on a topic related to India’s External Sector. The function was attended by senior dignitaries from the Government, Banking and the exporting community.
ECGC also organized commemorative meetings at various export centres. ECGC, in association with M/s. Dun & Bradstreet, distributed 55 ‘Export Excellence Awards’ to exporters in different categories, coinciding with the completion of 55 years of its operations. During the FY 2012-13, ECGC opened three new branches at Faridabad, Tirupur and Hyderabad, the branches in latter two cities being specialised branches. The Government of India subscribed ‘100 crores towards the Paid-up Capital of ECGC in September, 2012. The Company is in the process of launching a comprehensive Buyer Score Card system.
ECGC upgraded its portal and also established a link up with the Integrated Grievance Management System of the IRDA. The Company will shortly be opening its first ever overseas office at London, with a view to strengthen its underwriting techniques and recovery efforts.
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