Trade credit Insurance, which provides cover to hundreds of thousands of business-to-business transactions, is to receive up to £10bn of government guarantees, ministers announced today (Thursday).
The Trade Credit Reinsurance scheme, which has been agreed following extensive discussions with the insurance sector, will see the vast majority of trade credit insurance coverage maintained across the UK.
The guarantees are designed to support supply chains and help businesses during the coronavirus pandemic to trade with confidence, safe in the knowledge that they will be protected if a customer defaults or delays on payment.
Business Secretary of State Alok Sharma said: “Trade Credit Insurance is a daily necessity for hundreds of thousands of businesses across the UK – particularly those in non-service sectors such as the manufacturing and construction sectors.
“Our £10bn guarantee gives peace of mind to businesses, allowing them to continue to trade and maintaining liquidity in supply chains. This reinsurance scheme is an important step as we carefully set about firing up our economy as we emerge from the pandemic.”
SUPPLY CHAINS PROTECTED
The Economic Secretary to the Treasury, John Glen, said: “Billions of pounds of business turnover is supported by trade credit insurance each year. This reinsurance scheme will see the government and insurers working closely together to ensure that the vast majority of this cover remains in place. This means that businesses and supply chains can continue to be protected at this pivotal time as we begin to kick start the economy.”
Stephen Phipson, CEO of manufacturers’ organisation Make UK, said: “For most manufacturers, credit insurance is essential – giving them certainty that they will be paid for the orders they deliver. We’re pleased that the government has taken action to jump-start the credit insurance market – which will provide a welcome boost to our nation’s makers as they recover from the covid crisis.
The scheme is available on a temporary basis for nine months, backdated to April 1 and running until December 31 this year, with the potential for extension if required.
