Moral Hazard and Adverse Selection by Export Guarantee and Insurance Corporation[Morální hazard a nepříznivý výběr exportní garanční a pojišťovací společnosti, a.s]

The text refers to a specific field of the insurance market, which concerns export insurance by the state-owned insurance corporation (EGAP). In this company, we can find some moral hazard and adverse selection due to almost 100% guarantees to insured entities. The paper concerns the relationship between the insurance corporation and banks that grant loan to Czech exporters or foreign importers in high-risk countries. On the part of the bank, there exists adverse selection while submitting applications for insurance and moral hazard during the insurance relationship. These are the problems on the part of the EGAP, which has a conflict between supporting regional export affordability and realizing an optimal portfolio. With such high guarantees, banks can offer their clients high risk while receiving irrelevantly low insurance premiums. This text tries to identify some differences between the existing process of evaluation and the ideal set that decreases the impact of those two effects.