Credit insurance has become a comprehensive tool for modern credit management as Hong Kong's exporters face rising bankruptcies in their key markets, the United States and Europe. A director of German insurance giant Gerling, Robert Brixius, said the product should support rather than replace credit management. Mr Brixius said exporters should be responsible for selecting customers who they themselves deemed to be creditworthy. '[This is why] there is never a 100 per cent coverage because you have to make sure the policyholder is given an incentive to sell to good customers,' he said. Figures showed that the trend for Europe and the US in 1999 is for bankruptcies to increase and there were still big problems in the Asian markets. 'All companies have fire and liability insurance but not everybody has credit insurance so this is now a strategic line for the group,' he said. According to Mr Brixius, issuing goods on letters of credit is costly in financial terms and is administration-intensive. Mr Brixius said that, from a competitive point of view, it was better to supply on open terms. 'With the added tool of credit insurance, you can ask a third party their opinion of the buyers, and if they say they are OK, you can supply, and in the event of non-payment, you will be indemnified by the insurer,' he said. The managing director of Gerling's Hong Kong office, Michel Somers, believes export-credit insurance is now essential especially in the coming period and with uncertainty over the economies of Europe and the United States. 'That is why we have applied for an extension to our licence in Hong Kong to cover credit insurance, which we were granted in August this year,' he said. Both men admitted that the biggest defaulter was actually the German market, where insolvency rates are exceptional. They said that, as far as the Asian markets were concerned, Gerling had good luck. 'At the beginning of the crisis, we analysed the portfolio, went through all the risk we had in Asia and, in accordance with our clients, we reduced the coverage to an amount which was acceptable to all parties,' Mr Brixius said.