Shinbo Launches Special Insurance for COVID-19 Affected Companies... 200 Billion Won Support

[Asia Economy Reporter Kwon Haeyoung] The Korea Credit Guarantee Fund (KODIT) has launched a special insurance policy for companies affected by the novel coronavirus disease (COVID-19). It is scheduled to be supplied with a limit of 200 billion KRW, including small and medium-sized enterprises (SMEs) located in the Daegu and Gyeongbuk regions.

On the 25th, according to KODIT, a special insurance policy was introduced that accepts up to 85% of accounts receivable insurance premiums for industries that have suffered damage or are at risk of damage due to the spread of COVID-19.

Accounts receivable insurance is a system where KODIT compensates for losses borne by SMEs when they sell goods or services on credit to clients and fail to collect payments due to the buyer's default. The acceptance rate of accounts receivable insurance varies from a minimum of 70% to a maximum of 85% depending on the buyer's credit rating, but for this special insurance, a uniform rate of 85% will be applied.

A KODIT official stated, "We will support management stability through prompt insurance support for companies at risk of COVID-19 damage in accordance with the supplementary budget. We will establish swift and efficient support measures for companies at risk due to the spread of COVID-19, especially in severely affected regions."

This special insurance policy includes expanded premium discount rates and sales limits for policyholders. A 10% premium discount rate is applied, with a 20% discount for policyholders located in the Daegu and Gyeongbuk regions. The sales limit for policyholders is expanded from the current 200% of current sales to a special 300% limit.

The total acceptance limit is 200 billion KRW. For policyholders located in the severely affected Daegu and Gyeongbuk regions, the limit is 40 billion KRW, and for other regions, it is 160 billion KRW, with separate total limits operated for each.

Meanwhile, amid rising concerns about the bankruptcy of SMEs due to COVID-19, the number of SMEs subscribing to accounts receivable insurance is increasing significantly. From February this year to the 10th of this month, the number of accounts receivable insurance acceptances was 2,896, a 31% increase compared to the same period last year (2,204 cases). The acceptance amount was 3.0299 trillion KRW, a 25% increase from one year ago (2.4216 trillion KRW).

This content was produced with the assistance of AI translation services.