The European Commission has authorised, under the EC Treaty state aid rules, a measure adopted by Luxembourg to limit the adverse impact of the current financial crisis on export firms.
The Luxembourg authorities notified the European Commission of the measure in the context of the Commission Communication on short-term export-credit insurance and with reference to the Commission's Temporary Framework for state aid measures to support access to finance in the current financial and economic crisis, amended on 25 February 2009. It should be noted that this measure is of limited duration and scope, with a budget of EUR25m. It is therefore compatible with the principles underpinning the single market.
Competition Commissioner Neelie Kroes said: "European export firms are affected by the financial crisis in two ways. The volume of orders is falling on the one hand, while on the other they face growing difficulties in obtaining export insurance cover for particular kinds of risk. This measure enables the public authorities to take action in an area from which private market players have temporarily withdrawn, to help export firms to continue to create value.”
Under the notified scheme, the export-credit agency concerned, Ducroire Luxembourg, will provide export-credit insurance to complement insurance policies taken out with private insurance companies. Ducroire can provide credit up to a higher limit where evidence exists that private insurers have excessively reduced or even refused credit. The limits authorised by Ducroire will be based on an analysis of the underlying risk conducted by the private insurer and a further analysis carried out by Ducroire itself.
The Luxembourg authorities have provided sufficient proof that the necessary cover is unavailable on the private insurance market. The premiums required by Ducroire meet the condition of being aligned to those of the private market, as stipulated by the safeguard clause in the Commission's communication on short-term export-credit insurance. The premiums are set at a level that encompasses an additional margin, thereby providing an incentive for exporters to have recourse to private insurers again once normal market conditions have been restored. The measure's impact in terms of squeezing out private insurers is thus limited, which the Commission describes as vital in its analysis.
The Commission is therefore authorising the measure, which was notified under the Temporary Framework, until December 31 2010.
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