Peter Gisler is the CEO of SERV, the Swiss export risk insurer. He spoke to Swiss Trade about his switch to the insurer last year, the risks exporters face in unstable political situations, the importance of a solid contract between supplier and buyer, and how insurance can help exporters conquer new terrain.
You have led SERV for more than a year. What differences do you notice to your earlier work in banks and industry?
There are three sides in this business: the banks, industry, and insurance. I went from the first to the second and now I am in the third. At first it was a challenge to understand the mind-set of the insurance branch, because it has a different approach to problems from banks or industry. Secondly, it is a novelty for me to lead an organisation that isn’t engaged in completely open competition. But it is important for me to point our employees in a direction that ensures we are constantly improving in order to be able to act in a fast, solution-oriented manner. The third special characteristic of SERV is that it operates sustainably and for the long-term. My background is in companies that are publicly listed on the stock exchange and plan quarterly. It’s a different pace.
What problems do export companies face in politically uncertain situations?
In uncertain situations, payment risks increase and so does the pressure on exporters and payment conditions. Generally speaking, availability of local financing in the purchasing market means that the ability to offer export financing can be an important competitive advantage.
What risks should exporters pay special attention to?
The risks are numerous. One that we often recognize in handling claims is the quality of the sales contract. As trivial as this might sound, the basis of an export deal is always the contract between the supplier – in our case the exporter – and the buyer. I often see contracts containing legal and commercial deficiencies. Depending on the situation, these can cause the exporter difficulties. For example, if he can’t meet delivery deadlines – this can quickly have a financial impact on the exporter. The fact is that the best insurance solutions don’t help if the contract isn’t solidly structured and the exporter therefore is not in a position to claim payment from the buyer.
In which important export markets have risks changed most noticeably in recent times?
Foreign exchange-rate turmoil in Turkey and Argentina has changed the risk situation there. SERV remains open to insuring deals in these markets but carries out more detailed assessment on these requests.
What is the role of SERV in relation to private banks and insurers?
SERV is by law subject to the subsidiarity principle. That means that it works to complement the private market. It is a so-called Pure Cover Agency, which means that it only offers insurance and not financing, in contrast to many other state export credit insurers. As a consequence we need a functioning banking market to give Swiss exporters the best financial solutions in combination with our insurance products.
There are countries which offer great potential for Swiss exporters – Iran for example – where banks refuse to do business. How can SERV support exporters in these markets?
SERV is open to examining deals and offering insurance solutions in Iran. The condition, however, is that payment channels and financing possibilities are known in advance. Given the problems in Iran, this is very difficult at the moment. Our hands are often tied at this level. In other difficult markets we offer insurance solutions to cover short, medium and long term payment risks. With these, we can sometimes even enable exporters to enter a market they would otherwise not tackle. This was confirmed by our latest customer-satisfaction survey. In these markets, financing is a challenge. With the help of insurance, the exporter can offer the buyer financing that can be decisive in winning a contract in an international tender.