Guarantee Insurance Systems: Lessons from Korea for Latin America and the Caribbean

This study examines the role of the Guarantee Insurance System (GIS) in promoting economic development and financial inclusion, drawing on Koreas experience and assessing its applicability to Latin America and the Caribbean (LAC). Guarantee insurance can reduce credit risk, replace traditional collateral requirements, improve liquidity, expand access to credit and procurement opportunities for SMEs, and support infrastructure investment and financial inclusion. The analysis finds that Koreas successful GIS development was supported by a unified legal framework, centralized institutional coordination through an anchor entity such as Seoul Guarantee Insurance (SGI), and comprehensive credit-data infrastructure. By contrast, GIS markets in LAC remain underdeveloped due to fragmented regulatory frameworks, limited coordination between public guarantee funds and private insurers, weak data-sharing mechanisms, and limited product diversification. The study identifies key policy actions for LAC, including harmonizing legal frameworks, strengthening institutional coordination, improving data infrastructure, promoting public-private co-guarantee schemes, and diversifying guarantee products. It also highlights the role of multilateral development banks in supporting legal and institutional reforms, risk-sharing mechanisms, knowledge transfer, and pilot programs for underserved sectors.