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Su
Lei
Assistant General Manager, Investment Insurance
Department
China Export & Credit Insurance Corporation
Introduction to SINOSURE
China Export and Credit Insurance Corporation
(SINOSURE) is the only policy-oriented Chinese insurance company
specializing in export credit insurance. It started operation on
December 18, 2001. The company has a registered capital of RMB 4
billion, which comes from the Export Credit Insurance Risk Fund
as arranged by the State fiscal budget. SINOSURE is a national company
with 18 functional departments at headquarters, 12 business departments,
and 5 business divisions distributed throughout the major cities
in China. SINOSURE has also set up two overseas representative offices
in London and Dubai.
SINOSURE is mandated, in accordance with the
Chinese government's diplomatic, foreign trade, industrial, fiscal,
and financial policies to promote Chinese exports and overseas investments,
especially the export of high-tech or high added-value capital goods,
by means of credit insurance, financing, information, and receivables
management services.
The products of SINOSURE include Short-term
Export Credit Insurance, Medium-and Long-term Export Credit Insurance,
Investment Insurance, Bond and Guarantee Business, Debt and Capital
Retrieval Business and Credit Assessment Business.
Introduction to Investment Insurance
Investment insurance is a policy-oriented
business that is designed to provide the insured with risk guarantee
when they suffer economic losses due to war, currency exchange ban,
requisition, or breach of contract by the government in countries
where the insured have made investments. SINOSURE now operates two
major kinds of insurance in this regard, namely OVERSEAS INVESTMENT
INSURANCE and INBOUND INVESTMENT INSURANCE.
The characteristics of Investment Insurance:
1 Funded by government
SINOSURE is funded through Export Credit Insurance Risk Fund,
which is arranged by the State fiscal budget.
2 Nonprofit oriented
Investment insurance is not a profit-oriented program. It
is intended to operate on the break-even base.
3 Distinct to commercial insurance
Investment insurance is designed to protect investments against
political risks, which are, in most cases, excluded by commercial
insurers.
Functions of Investment Insurance
Loss Reduction
Enterprises (Banks) carry out prudent risk assessment process
prior to making investment decisions. SINOSURE can help them get
a deeper insight into the economic and political environment in
the host country, thus preventing the occurrence of losses that
can be avoided in advance. Should any losses arise because of
political risks, the insured will receive large portion of investment
as compensation from SINOSURE, thus reducing the loss of the investment
Finance Facilitation
Investments projects rely largely on financial supports. Financial
difficulties can seriously deter the process of investment projects.
With the support by SINOSURE, banks would consider to provide
financial supports from banks, who are likely to offer investors
preferential conditions such as increasing borrowing limit and
loan extension, which offers investors a easier access to financing.
Emerging Market Exploration
SINOSURE can not only help enterprises diversify risks and alleviate
concerns but also promote enterprises to explore new international
market and invest in countries where the risks are high or investors
are not familiar with the environment by means of systematic country
risk control and management mechanism.
Professional Risk Management
SINOSURE is the official member of 'The International Union of
Credit and Investment Insurers' (The Berne Union) and has close
cooperative relations with member countries. Meanwhile, SINOSURE
also has access to various information sources including concerned
ministries of state council, banks and some credit rating and
investigation institutes around the world. This ensures that SINOSURE
always has the latest political and economic news and updates
overseas, which guarantees the comprehensive timely information
to investors at any time.
Risk Covered under Investment Insurance
Program
Expropriation: protects
against losses arising from nationalization, confiscation, and
creeping expropriation. Non-discriminatory measures are not covered
Restrictions on Conversion & Transfer:
protects against losses arising from inability to convert local
currency into foreign exchange and/ or transfer foreign exchange
outside the host country. Currency depreciation is not covered.
War & Political Violence: protects
against losses arising from damage/disappearance of tangible assets
and inability to operate due to war or political violence (including
revolution, insurrection, coups d'état, sabotage, and terrorism).
Breach of Contract: protects against
losses arising from breach or repudiation of a contract with the
investor by the host government, including local governments.
FAQs:
1. Who is eligible under overseas investment
insurance program?
(1) Enterprises and financial institutions
registered and having its principal place of business in Mainland
China?excluding those controlled by foreign, Hong Kong, Macao
and Taiwan enterprises, institutions and citizens;
(2) Enterprises and financial institutions registered outside
China or in Hong Kong, Macao and Taiwan provided over 95% of the
total shares are controlled by Chinese enterprises, institutions
and citizens;
(3) Other qualified enterprises and financial institutions approved
by SINOSURE.
2. Who is eligible under inbound investment
insurance program?
Foreign investors licensed to invest in
China.
3. What types of investments are eligible
under investment insurance?
(1) Direct investments, including equity
investments, shareholder loans, and shareholder guarantees;
(2) Financial institution loans;
(3) Other types of investments approved by SINOSURE.
4. What are the insurable interests under
the program?
Investments and realized earnings caused
by the insured risks are insurable under the program.
(1) Direct investments: loss of capital and realized earnings
directly caused by the insured risks;
(2) Loans: loss of capital and accrued interests directly caused
by the insured risks;
(3) Other forms of risks: investment and realized earnings caused
directly by the insured risks.
5. Do investors have to choose all the
risks?
No. Investors may choose one or any combination
of the risks: expropriation, war, restrictions on remittance and
breach of undertaking. Nevertheless, investors are allowed only
to subtract insured risks from the insurance policy on renewal.
6. What are the available products under
the program?
(1) Equity insurance
(2) Loan insurance
(3) Others approved by SINOSURE
7. How is the insurance period determined?
There are two types of insurance period:
initial insurance period and commitment insurance period. The
commitment insurance period equals the payback period of investment
projects (equity insurance) or the loan repayment period (loan
insurance), usually 3-20 years. The initial insurance period is
3 years after which investors are required to renew the insurance
policy annually. The insured is entitled to choose whether to
renew the insurance policy while the insurer has no right to reject
renewal application.
8. How is the insured amount determined?
There are two different kinds of insured
amount under the investment insurance program: Maximum Insured
Amount and Current Insured Amount.
The Maximum insured amount represents the
overall limit of liability committed by the insurer under an insurance
policy. It is determined by the insured and agreed between the
insured and the insurer. The insured is entitled to lower the
maximum insured amount. Once the claim payment is made the maximum
insured amount shall decrease in respect of that claim.
The current insured amount represents the
liability committed by the insurer actually in force during the
current insurance period. It is determined by the insured and
agreed by the insured and the insurer. Once the claim payment
is made the current insured amount shall decrease in respect of
that claim. The current insured amount shall not exceed the maximum
insured amount.
9. What is the percentage of cover?
The investment insurance covers 90%-95%
of the total loss.
10. How should investors make a claim when
losses occur?
The insured is required to notify the insurer
within 30 days of the date on which the losses occur and submit
claims within 18 months of the date on which the losses occur
with filled claim form and all required supporting documents,
letters regarding the validity and authenticity of the claim.
11. What is the procedure of application?
(1) Letter of Interest
(2) Letter of Intent
(3) Issuance of Policy
(4) Renewal of Policy
12 . What are the documents and information
to be provided by investors?
(1) Information of investors, including
the copies of business licence, audited financial statements from
last three years and its experience with respect to the proposed
investment etc.
(2) Information of the project and backgrounds: amount of investment,
form of investment, project life, form of financing, current status
and effects on the host country.
(3) Information of financing: loan provider, amount of financing,
repayment period etc.
(4) Feasibility study of the project
(5) All necessary government approvals, agreements, guarantees
and relevant documents and information required by SINOSURE
(6) Other required information
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