The system of Hermes covers was originally introduced in 1949 for cases where firms could find no private insurance and has become a pillar of Germany's export industry.
The federal guarantee is necessary because it is not possible to obtain adequate cover from private insurers, particularly against political risks for exports to non-OECD countries.
[2][3] A study commissioned by the German Ministry of Economics and Technologies carried out by Prognos concluded that the net effect of Hermes guarantees on employment is in the order of 140,000 to 210,000 jobs, mainly in the mechanical engineering, electrical engineering, and chemical sectors, most Hermes guarantees being for small and medium-sized enterprises (SME).
In recent years, state export credit agencies (ECAs), including Hermes have been increasingly subject to public scrutiny, because they backed projects that some disapproved of, for instance because of environmental concerns.
As stated by the ECA, it is the aim of the German government not to support any projects that have serious negative ecological, social, or developmental consequences.