WIREDGOV

Businesses with supply chains which rely on Trade Credit Insurance are now eligible for further support from the government.

On 13 May, the UK Government announced that businesses with supply chains which rely on Trade Credit Insurance and who are experiencing difficulties maintaining cover due to Coronavirus will get further support from the government.

Trade Credit Insurance provides cover to hundreds of thousands of business to business transactions. It insures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another. But due to Coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.

To prevent this from happening, the government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market. This will support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on payment.

The guarantee will be delivered through a temporary reinsurance agreement with insurers currently operating in the market.

The government will work with businesses and the industry on the full details of the scheme to ensure firms are supported and risk is appropriately shared between the government and insurers.

The guarantees will cover trading by domestic firms and exporting firms and the intent is for agreements to be in place with insurers by end of this month.

The guarantee will be temporary and targeted to cover COVID-19 economic challenges, and will provisionally last until the end of the year. It will be followed by a review of the TCI market to ensure it can continue to support businesses in future. Further details will be announced in due course.

This intervention will keep cash flowing within critical supply chains and more importantly, it will help lower risk for exporters and ensure that UK firms can continue to trade with other countries. In addition, this intervention can provide much needed confidence for small busiensses to get back on their feet and start trading again. This temporary reinsurance scheme should mean that small businesses don’t have their trade credit insurance withdrawn and should be able to continue to access affordable insurance to support trading with other businesses.

Further details on the announcement are available here.