Export Finance and Insurance Corporation (EFIC) has signed a Reciprocal Reinsurance Agreement with ASHRA, The Israel Export Insurance Corporation, making it the sixth cooperation agreement EFIC has secured with counterpart export credit agencies (ECAs) over the past two years.
This agreement enables Australian and Israeli companies to collaborate more easily on international contracts and benefit from the streamlined financing packages and administrative efficiencies created under the agreement.
“Overseas buyers find reciprocal reinsurance agreements particularly appealing when choosing suppliers because of the one-stop nature of the service. They need only to deal with the leading ECA and therefore save costs and time in finalising a deal. These types of agreements can facilitate Australian exporters to participate in large overseas contracts,” explained Chang Foo, Head of Product Management and Risk Transfer at EFIC.
With increasing globalisation it is now common practice for projects to be sourced from multiple countries.
“This type of multi-sourcing provides Australian exporters with opportunities not only to take lead roles but also to be invited by overseas companies to be sub-contractors to the main export contract,” said Foo.
Under reinsurance agreements, the lead ECA provides export credit cover for the entire transaction on its usual terms, while the other ECA, whose exporter is a sub-contractor, provides reinsurance for its portion of the transaction to the lead ECA.
Buyers and borrowers need only negotiate one set of documents with the lead ECA. EFIC has also established similar reinsurance agreements with Euler Hermes Kreditversicherungs AG of Germany, Exportkreditnämnden (EKN) of Sweden, Office National du Ducroire (ONDD) of Belgium, Nippon Export and Investment Insurance (NEXI) of Japan and Atradius Dutch State Business NV.
EFIC will continue to explore the reinsurance network with other countries to support the development of international business and create opportunities for Australian exporters.