Mubo Pays 370 Billion Won for Unreceived Export Payments... Recovery Rate Only in the 30% Range

[Asia Economy Sejong=Reporter Dongwoo Lee] Korea Trade Insurance Corporation (K-sure) has paid out 370 billion KRW this year on behalf of exporters who did not receive their export payments, doubling the amount from last year. In contrast, the recovery rate of claims due to trade insurance incidents remains only in the 30% range, raising concerns about the potential for large-scale losses.

According to data submitted on the 12th to the office of Ku Ja-geun, a member of the People Power Party, the claims arising from insurance incidents at K-sure reached 368.6 billion KRW as of the end of August this year. Over the past five years, the amount of overseas claims for which K-sure paid insurance due to incidents has shown an upward trend: 161.1 billion KRW in 2019, 214.5 billion KRW in 2020, and 209 billion KRW in 2021.

K-sure plays a role in guaranteeing risks arising from trade or foreign transactions for domestic export companies. When an insurance incident occurs, K-sure pays insurance money to the export companies and subsequently recovers export claims from overseas debtors.

On the other hand, the cumulative recovery rate of overseas claims by K-sure remains at only 30%, and as of the end of August this year, the outstanding overseas claims balance at K-sure reached 1.6921 trillion KRW, highlighting the urgent need for countermeasures.

The balance of trade insurance support provided by K-sure to export companies dealing with high-risk countries (rated 5 to 7) with low sovereign credit ratings also reached a total of 15.9 trillion KRW as of the end of August, increasing the risk of large-scale losses. Due to worsening external conditions such as supply disruptions caused by the COVID-19 pandemic and the Russia-Ukraine war, concerns are spreading that high-risk countries with vulnerable economic structures may fall into a chain of defaults.

According to K-sure, countries rated 5 include 29 nations such as Bangladesh, Brazil, Turkey, and Greece; those rated 6 include 42 countries such as Ukraine, Nepal, and Cambodia; and those rated 7 include 86 countries such as North Korea, Mongolia, Russia, and Syria. So far, Sri Lanka (which declared default in April), Pakistan, Egypt, Bangladesh, and Laos have either received or applied for bailout funds from international organizations such as the International Monetary Fund (IMF).

K-sure stated, "In Sri Lanka, Pakistan, Tunisia, and Peru, rising prices of essential goods such as food and energy have heightened public dissatisfaction, leading to increased anti-government protests and growing political and social instability in these countries. If this situation continues, cases of delayed or non-payment of export payments in emerging countries may increase, significantly raising the number of insurance incidents."

Lawmaker Ku Ja-geun pointed out, "As the risks of international trade transactions increase recently, special caution is required for South Korean export companies, and urgent measures are needed to improve K-sure’s overseas claim recovery rate and strengthen monitoring of high-risk countries."

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