The German export insurer Euler Hermes will potentially reduce its coverage of exports to Greece, due to uncertainty about the country’s future in the eurozone.

In an official statement Euler Hermes states that the continuing Eurozone crisis and the failure of the recent Greek election to establish a majority in parliament will mean that the insurer will “probably have to switch to a more prudent approach, also in the interest of its customers”.

It adds: “The last election in Greece adds more difficulties to a deep economic crisis. Any kind of decisions for investments, financing, and strategy are blocked or delayed. The outcome of the new elections in June remains highly uncertain.

“Consequently, the situation is further deteriorating. The risk of Greece exiting the Eurozone has been revived.”

A decision about its Greek cover is expected to be made by Euler Hermes by the end of May.

The news follows a report released by the German insurer in late May which revealed that the eurozone crisis is leading to increased business insolvencies across the world.

After a drop of 4% in 2011, Euler Hermes expects its Global Insolvencies Index to rise by 3% in 2012.

“The decline in corporate insolvencies has lost momentum, hampered by the slowdown in the world economy in the second half of 2011. This reversal of trend is now confirmed, with very weak growth figures in the first quarter of 2012,” says Ludovic Subran, chief economist and director of research at Euler Hermes.

In 2011 business insolvencies fell across the world except in Europe. There was a 6% decline in Asia Pacific compared to a 7% increase in business failures in Europe. Southern European countries are particularly suffering from rising insolvencies.

“In these countries, 2011 was another bad year that tarnished an already very weak picture. Business failures have reached record levels there and economic forecasts do not point to any improvement in 2012, with high risks of contagion if the debt crisis is not resolved,” comments Maxime Lemerle, head of macroeconomic and business insolvency analysis at Euler Hermes.