Tuesday, July 21, 2015
“Korean firms are the driving force behind the Korean economy and K-SURE is always there for them in their endeavor to spread their wings toward global trade.”
What K-SURE does.
Established in July 1992, the Korea Trade Insurance Corporation (K-SURE) is the country's official export credit agency under the Ministry of Trade, Industry, and Energy.
The mission of its 490 employees is to boost national competitiveness through promoting trade (export and imports) and overseas investment by Korean enterprises.
As is often the case for ECAs, K-SURE's operations are backed by a national Trade Insurance Fund. Any profits of the fund shall be reserved in full. Losses shall be covered either through reserve amounts or, if not sufficient, through government indemnifications.
The business is increasing.
Over the past years, insurance premium income has increased steadily. Recently, reinsurance activity has increased, but still at a very low scale. Nevertheless, total operating income decreases, basically due to a declining recoveries income.
K-SURE makes losses.
According to Art. 4 of the Korean Trade Insurance Act, insurance premia should be set to maintain the balance of earnings and expense of the trade insurance business. This doesn't seem to work out very well, if you consider that K-SURE is constantly making losses.
As you can expect from any subsidized activity, such losses are compensated for by higher contributions (namely from the Korean Government).
K-SURE's Risk Management Scheme
Let's finish with another great example of why I love organizational design, especially in public administrations:
Risk is analyzed, reviewed, managed, and underwritten by divisions, departments, and committees. Luckily, there is an audit office that keeps an eye on all this...