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Credit insurance

In an international context characterised by competition and globalisation, control of financing techniques, guarantee mechanisms and risk cover for international trade are essential to the development of Tunisian export companies. Within this framework, the Insurances Code promulgated by Law 92-24 of March 9 1992 was amended by Law 97-24 of April 28 1997 section IV relating to insurance at export, to better meet the needs of exporting companies regarding the coverage of risks. This legislation has the following elements:

1. Insurance at export

Under the new article 101 of the Code, the insurance at export covers export transactions and related transactions against the losses resulting from the realisation of commercial and non-commercial risks.

2. Persons concerned

Article 102 of the Code specifies that insurance at export can be contracted by

  • Legal entities or persons that perform export transactions
  • Banks and financial institutions for loans granted either to the persons cited in the previous paragraph or to their buyer

3. Definition of risks

The new Chapter II of the Code, entitled The Risks, defines the risks covered by insurance at export. These are commercial risks and non-commercial risks. Under article 105, the following are considered as commercial risks – the non-execution by the buyer or the guarantor of his contractual obligations when this buyer or guarantor is a person other than those mentioned in paragraph 2 of article 104 of the same Code (such as a buyer in bankruptcy, a buyer in financial difficulty, or when there is a simple refusal to pay).

The non-commercial risks are defined as follows: the non-execution by the buyer or the guarantor of his contractual obligations as result of a civil or foreign war, disturbance, revolution or riot in the country of the purchaser or guarantor; or because of a dispossession, seizure or confiscation by the authorities of the buyer's country of the expedited goods; or the non-renewal of the importation licences or prohibition of entry of the goods. Other non-commercial risks include the non-execution by the buyer or the guarantor of his contractual obligations when the buyer or guarantor is a public body or a company in charge of a public utility; the non-execution by the buyer or the guarantor of his contractual obligations following a natural disaster that has occurred in the buyer or the guarantor's country; or lastly, the non-transfer of funds because of legislative or administrative measures in the buyer or the guarantor's country.

In all these cases, insurance at export does not cover the losses if the insured party does not respect the contract's terms, or the laws and regulations in force in the country of the purchaser or guarantor.

4. Guarantee funds

The new article 107 of the Code reinsures guarantee funds of risks at export. It reinsures the non-commercial risks and the commercial risks relating to export transactions, and is essential for the growth of the national economy. Decree 98-1690 of August 31 1998, modified by Decree 2002-2074 of September 10 2002, sets out the operating methods and conditions of these funds. The fund reinsures the risks according to these two methods:

  • Reinsurance treaties concluded between the Finance Minister and the company charged with managing the funds, or between the funds and assigner companies
  • Optional reinsurance on a case-by-case basis, after approval of the Risks At Export Guaranty Commission

Within this framework, and since its creation in 1984, Cotunace (the Tunisian Company for foreign Trade Insurance) has been given the task of managing non-commercial risks and certain commercial risks under the guarantee funds of risks at export on behalf of the state.

These risks are non-insurable by the private market (political risks, natural disaster), or they may exceed the Cotunace's technical capabilities. Through this mechanism, Cotunace plays a role in developing and promoting export. Similar mechanisms exist in most of the countries that set up a system of insurance at export credit. The French Company of Insurance for Foreign Trade (La Compagnie Françaize d'Assurance pour le Commerce Extérieur, La Coface) is another example.

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