New measures

After the establishment, at the end of October, of credit mediation, temporary support and accompaniment measures were presented on 27 November 2008 by French Minister for Economy, Christine Lagarde. These measures aim at allowing businesses, SMEs in the first place, to continue to access the credit insurance coverage that they need to conduct their activities.
Indeed, credit insurance plays a key economic role by covering companies against their clients’ risk of failure. In France, one-quarter of inter-business credit – in other words, 320 billion euros – is thus covered in this way. Concretely, the chosen measures consist of a public re-insurance solution, the Credit Insurance Complement (or CAP), for the share of risks that credit insurers have decided to no longer cover. The CAP, offered by the Caisse Centrale de Réassurance (CCR) and backed by a State guarantee, is commercialised directly by credit insurers to their clients. As the CCR covers the share most exposed to risk, the cost of the CAP is significantly higher than market rates – a rate of around 3 for every thousand units (excluding expenses) of the turnover insured, as opposed to an average of a little less than 2 for every thousand unites.
Moreover, this measure, available over a six-month period, has been developed on the basis of re-insuring a hypothetical 5 billion euros, in other words, barely over 3% of sums concerned by credit insurance per semester. For Laurence Parisot, President of the Medef (French employers’ union), “the heart of the problem is the way in which credit insurers grade companies. Transparency must be improved so that companies themselves are informed of ratings and do not learn about them from their providers.” Committing to changes in this direction, Coface, world number 3 in credit insurance, has joined forces with Medef to confront this problem.