Businesses with supply chains that rely on trade credit insurance and that are experiencing difficulties maintaining cover due to coronavirus will get support from the government, the Economic Secretary to the Treasury, John Glen, has announced.
Trade credit insurance provides cover to hundreds of thousands of business-to-business transactions, particularly in non-service sectors such as manufacturing. 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 But due to coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.
TEMPORARY GUARANTEE
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 Economic Secretary to the Treasury, John Glen said: “This country’s businesses are crucial in helping us to kick-start the economy as we get back to work, and I will do everything I can to help support them through this difficult time. By guaranteeing business-to-business transactions currently supported by trade credit insurance, we will help to maintain a vital cog in our economy.
UNPRECEDENTED SUPPORT
“This is on top of an unprecedented package of support we have put in place to help protect individuals, businesses and the economy.”
Business Minister, Paul Scully, said: “Giving businesses the confidence to continue trading is vital to seeing us through this crisis. This guarantee will be essential as we seek to reopen new sectors of the economy and get the UK back to work in a way that is safe for everyone.
“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 CV-19 economic challenges, and will provisionally last until the end of the year.
