KredEx Krediidikindlustus indemnified EUR 1.8 million in losses

Last year KredEx Krediidikindlustus indemnified 21 loss events to Estonian companies in the total amount of EUR 1.8 million. The biggest losses were related to insolvency of Estonian and Ukrainian companies.

Out of the losses paid by KredEx Krediidikindlustus in 2015, 9 were related to transactions concluded between Estonian companies, and for the remaining losses, the party was a company operating in a foreign country.

“The biggest loss, amounting to EUR 800,000, was specifically related to the payment problems of an Estonian company in a situation where the goods were sold; however, the buyer remained in arrears. The other major loss involved a Ukrainian company, where a similar scenario was realised,” explained Meelis Tambla, Chairman of the Management Board of KredEx Krediidikindlustus, according to whom insuring a company against unforeseen payment losses is reasonable domestically as well as when concluding transactions abroad. “Given the current economic situation, even a stable business may incur solvency problems and collecting the agreed payment for the delivered goods or provided services may become impossible,” he added.

According to Tambla, an exporter’s insurance contract saves the company from tracking down debtors as well as from participating in a bankruptcy process. “It is our experience that the fear that payments from abroad will be delayed or not collected at all is one of the impediments which hinders transactions. An insurance contract covers the losses from uncollectible accounts receivable, when the goods have been delivered or service provided, but the client is found to be insolvent,” said Tambla, citing an example.

The manager of KredEx Krediidikindlustus, however, pointed out that insurance can be taken out only to cover the insolvency of a client, not the losses arising from a bad deal, and advised that attention be paid to the formulation of contracts when concluding them. “When preparing and entering into sales contracts one must act with prudence and, if necessary, use the help of specialists, to preclude any possible disputes and objections,” he added.