The EU's investigation into China's photovoltaic sector is the largest in history and could destabilize the entire industry. (Photo/Xinhua)
Chinese insurers are closely watching developments in the European Union's antidumping investigation against China's solar products, anticipating greater claims under their export credit insurance policies on such products, Guangzhou's 21st Century Business Herald reports.
"We have been in close contact with solar companies about the latest developments in the antidumping case and their responses," an official with China Export and Credit Insurance Corp told the newspaper.
EU announced the anti-dumping investigation on Sept. 6, after reviewing complaints filed on July 24 by a group of European solar companies, including Germany's SolarWorld, against Chinese imports, which were valued at US$20.4 billion in 2011.
This is the largest investigation against China in history and will impact the Chinese industry more strongly than the previous anti-dumping and anti-subsidy cases by the United States, since 90% of Chinese solar products are sold overseas and 60% of China's exports are shipped to Europe, the newspaper said.
With over 50% of China's solar exports insured with various policies, mainly export credit insurance, insurers can expect a larger number of claims if the risk associated with the antidumping case is seen as political.
Of note, antidumping investigations are typically not seen as an adverse political development to be covered by export credit insurance. Yet, the newspaper said, the cancellation of orders if buyers are banned from making payments, or their import permits are revoked, could be seen as a political risk.
Meanwhile, the solar energy industry has grown increasingly risky for insurers, as it faces a weak European market because of the debt crisis, falling demand, and rising trade protectionism.
The insurance industry is seeing a growing number of claims for failed solar energy deals, with the first quarter environmental risk index of China's short-term trade credit published by China Export and Credit Insurance Corp dropping to 102.29 from the previous quarter's 103.90, indicating slightly greater risk.
An insurance company executive also pointed out that besides the increasing number of claims, insurers could also see lower income from policies sold to the solar industry.