DEPARTMENT FOR
BUSINESS, INNOVATION AND SKILLS News Release (2009/182) issued by
COI News Distribution Service on 9 June 2009
Business Secretary
Peter Mandelson today announced changes that will mean many more
firms can now purchase top-up cover as part of the
Government's trade credit insurance scheme.
Since 1 May, companies who have had their credit insurance cover
reduced have been able to purchase six months top-up cover under
the £5bn Government Scheme.
In response to requests from business, from today eligibility for
the scheme will be backdated to include suppliers who had their
cover reduced since 1 October last year. Previously, the Scheme
was available to companies who had cover reduced since April this year.
Business Secretary Lord Mandelson said:
"This extension will give more small and medium sized
businesses flexibility to respond to a reduction in their credit
insurance cover. We are acting decisively to help more businesses
and allow them the breathing space to adjust their business models
in response to the current climate."
CBI Director-General, Richard Lambert said:
"This
change, which the CBI called for, gives more help to those
businesses left vulnerable without sufficient trade credit
insurance cover since the autumn. Restoring confidence is critical
to improving the economy, and this gives companies more certainty
about their ability to trade."
Also from today credit insurance provider HCC will join the three
largest credit insurers (Euler Hermes, Atradius and Coface) as a
provider of the Government Scheme.
The Scheme, which runs until 31 December 2009, allows suppliers
to purchase Government-backed insurance to either restore cover to
the original level or double the amount they are able to obtain
from the private sector up to the value of £1m (whichever is the lower).
To apply or for further information companies should contact
their trade credit insurer. Further information is also available
through Businesslink.
Notes to Editors:
1. Trade credit insurance contracts provide
suppliers insurance against the risk of a buyer defaulting on
their payment for goods after a period of credit. The product
helps give suppliers confidence to extend sometimes lengthy
payment terms to their buyers and banks the security to provide
working capital facilities. By offering suppliers protection
against financial loss, trade credit insurance is sometimes used
to support provision of financing products such as loans, invoice
discounting and factoring services. Reduction or withdrawal of
credit insurance can therefore lead to financial pressure on both
buyers (as suppliers may wish to shorten payment terms) and on
suppliers (due to its interaction with other financial products).
2. The scheme will now cover a business' trade providing the
cover was reduced after 1 October 2008. The business would simply
be able to purchase a policy, topping up their cover to the
maximum level it was since 1 October 2008 or to match the reduced
level of cover so long as the government bears no more than 50% of
the total risk. This will also be the case where a company has had
their cover withdrawn completely since 1 October but had since had
cover partially reinstated.
3. The three largest credit insurers (Euler Hermes, Atradius and
Coface), and now also HCC International Insurance Company plc,
have agreed to offer the scheme to their eligible clients. Scheme
membership has also been opened up to other credit insurance
providers with whom Government is currently in discussions.
Eligible businesses should apply for the scheme through their
credit insurance provider.
4. In 2008 credit insurance firms insured over £300bn of
turnover, covering over 14,000 UK clients in transactions with
over 250,000 UK businesses.
5. Further details of the scheme can be found on the BusinessLink
website at the following URL http://www.businesslink.co.uk/creditinsurance
6. On Tuesday April 21, the Association of British Insurers
released a Statement of Principles outlining the standards of
service customers can expect from their insurance provider. All
insurers offering the Government top-up scheme are required to
have signed up to the Statement. The Statement can be found at the
following URL http://www.abi.org.uk/Newsreleases/viewNewsRelease.asp?nrid=17616
Department for Business, Innovation & Skills
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