68% exporters don’t have credit insurance, says Omani official

Business Saturday 02/July/2016 21:11 PM
By: Times News Service
68% exporters don’t have credit insurance, says Omani official

Muscat: About 68 per cent of Oman’s exporters do not have government credit insurance, putting them at risk of defaults and lengthy settlements following disputes with the private insurance companies, some of which are located offshore and operate online, senior government officials said.
“This is primarily because of a lack of awareness and miscommunication,” Khalid Al Jashmi, acting general manager of Export Credit Guarantee Agency of Oman, (ECGAO) told the Times of Oman in an exclusive interview.
ECGAO is the Sultanate’s credit agency responsible for promoting non-oil exports through its credit insurance, guarantee and financing services to exporters.
Online trade credit
“Lots of exporters resort to online trade credit insurance, which at times is cheap, but doesn’t cover all aspects, for example business losses incurred due to commercial losses in the domestic market,” he said.
There are also many private insurance companies, which are not registered with the Sultanate of Oman.
One ECGAO official, who wished to remain anonymous said, “Another thing is trust. One can’t trust these groups. Some of them are working illegally here. Rules of CMA (Capital Marketing Authority) state that if you want to insure you have to register with the government of Oman. There are many insurance companies that are not registered here. Some of them are operating online and they are ironically not even registered. These companies normally offer low premiums initially and at a later time start withdrawing or reducing the sanctioned limits.”
The ECGAO official also raised safety concerns when dealing with private credit insurance companies.
“One thing is that these companies are not in Oman. They are not linked to the government. We are the government. We give a guarantee. We make sure insured export companies get their money back,” the official added.
Local exporters
Asked how the ECGAO is addressing this shortcoming, Al Jashmi said, “We are trying to educate local exporters. The agency has been there for some time, however, it’s not known to many. We offer lots of flexibilities and facilities. We are trying to market ourselves. We are trying to change our strategy. We need to reach students and colleges to tell them about business and export insurance, which will reach their parents too.”
Meanwhile, regarding revenues, Al Jashmi said some of the private credit insurance companies, which are operating online, have a huge presence.
“These companies have huge premiums and assets. They can absorb any price. Their revenue is over OMR1 billion. Our revenues are very low, something like around half a million OMR a year. That’s not much. But we are targeting higher earnings than that,” he added.