Credit Insurance And Credit Guarantee
Credit Guarantee and Credit Export
a. Credit Insurance
Credit insurance as a protection provided by Asei Re as the “INSURER” to a Bank/Non-Bank Financial Institution as the “INSURED” against failure risk of a Debtor to pay credit facility and cash loan disbursed by Bank/Nonbank. Credit insurance has a nature of bi-party between Bank/Non-Bank and Asei Re. In this case, the Debtor is not included as a party in the insurance agreement of Asei Re over the credit disbursed by Bank/Non-Bank to Debtor.
The indemnity of Asei Re is in the range from 70% to 80% of the loss suffered by Bank/Non Bank.
Types of Credit Insurance:
- Working Capital Credit Insurance (KMK) for construction/non-construction projects, goods/services procurement, bill/receivable financing, stocks/goods financing and Pre-Export Financing.
- Revolving General Working Capital Credit/Current Account Insurance
- Aplofend General Working Capital Credit Insurance
- Investment Credit Insurance/Project Financing
- Micro Credit Insurance under executing pattern to Financial Institution (BPR/BPRS, Cooperative/Savings and Loan Cooperative/ Employee Cooperative/ Civil Servant Cooperative/ Sharia Financial Service Cooperative/KJKS)
- Micro Credit Insurance under direct channeling pattern to end-users (personal/employee/civil servant)
- Insurance of Food and Energy Security Credit (KKP-E)
- House Ownership Credit (KPR) Insurance
b. Credit Guarantee
It provides guarantee to the Bank against risk of Debtor’s/Principal’s default to repay non-cash loan facility granted by the Bank. It has a nature of Three-Party Agreement involving Bank, Debtor/Principal and Asei Re by the existence of the Indemnity Agreement which constitutes a form of Recourse Agreement to Debtor/Principal. In the event Asei Re has paid the claim to the Bank, the Debtor will have the obligation to repay to Asei Re the amount of the claim (plus interest fine) that Asei Re has paid to the Bank.
The indemnity of Asei Re is 100% of the Loss suffered by the Bank
Types of Credit Guarantee :
- Guarantee to Open Letter of Credit (L/C) for Import (Usance L/C and Sight L/C Sublimit TR/UPAS) Guarantee is granted by Asei Re to the Opening Bank of Import L/C on behalf of the Applicant/Importer in the event of default payment on the due date of L/C.
- Guarantee to Open Letter of Credit with Domestic Documentation (SKBDN) both for Usance and Sight sublimit TR/UPAS) Guarantee is granted by Asei Re to the Opening Bank of SKBDN for the interest of the Applicant/Importer in the event of default payment on the due date of SKBDN.
- Bank Counter Guarantee and Standby L/C (SBLC) Guarantee is granted by Asei Re to the Issuing Bank of Bank-Guarantee/SLBC on behalf of the customer (Debtor/Principal) in the event the Principal/Customer experiences default..
The objects of the Bank Guarantee among others are:
- Bid Bond,
- Performance Bond,
- Advance Payment Bond,
- Payment Bond both for construction and nonconstruction,
- Maintenance Bond,
- Bond for other purposes (except for bond to obtain financing facility from Financial Institution).
Benefits of Credit Insurance & Credit Guarantee are as follows:
a. For Banks :
- Non-bankable transaction due to the lack of collateral requirements but feasible can be assisted by the Asei Re’s Insurance and Credit Guarantee. The Asei Re’s Insurance or credit guarantee can replace part of the collateral erquired by teh Bank to support teh grant of credit to real sector.
- requirements for the customersFor non-cash transaction in particular on the basis of risk assessment condicted by Asei Re which also considers the risk analysis performed by the Bank, Asei Re may grante (100%) of the non-cash loan value grantedby the Bank and more lenient collateral guarantee up to one hundred percent
- Reduction in risk premium so that the lending rate is more competitive. Credit risk transferred to Asei Re can be calculated as a decrease of risk element in pricing the interest (reduction in risks premium).
- Reduction of ATMR Weight over the credit insured or guaranteed to Asei Re as a SOE engaged in insurance and credit guarantee is calculated at 50% (fifty percent) in accordance with the Circular Letter of BI No. 11/1/DPNP dated 21 January 2009, so that the credit usage does not erode Bank’s capital adequacy ratio.
- Free-based income and the placement of Debtor’s cash collateral at the Bank so that the Bank may take advantage from the placement of funds.
- Bank’s safety net may avoid 100% of own retention. By utilizing Asei Re’s Credit Insurance facility, Bank has developed strong strategic partnership with one of banking safety nets against risk of credit it distributed. It is not necessary for the Bank to bear alone all of the losses (100% own retention) that in the long-term may lead to catasthropical risks by transferring potential loss risk to Asei Re.
- Second opinion in the analysis of credit granted. Asei Re performs risks assessment of coverage/guarantee that Bank will provided to Asei Re. Hence, the Bank will obtain second opinion from Asei Re.
- Client referrals, Asei Re may provide referrals to any customers that have good track record eligible for Bank facility.
- The function of Bank intermediacy increases. The Bank becomes more competitive, bold and passionate in extending credit to real sector with credit protection and non-subsidized incentives of the benefits mentioned above. Hence, Bank intermediacy will increase, particularly in real sector financing.
b. Benefit for Real Sector/Debtor
- Real sector will be highly assisted by Asei Re’s products that bridge between real sector and the Bank.
- Competitiveness of real sector will be assisted through an adequate liquidity and better interest credit facility because of the Bank financing supported by Asei Re.
- The new employment opportunity is created that reduces unemployment rate. c. Support of Reinsurance:
Reinsurer treaties of Credit Insurance are:
- PT Reasuransi Nasional Indonesia (leader)
- PT Reasuransi International Indonesia
- PT Tugu Reasuransi Indonesia
- PT Asuransi Bumida 1967