Government formally announces trade credit insurance backing
The UK Government has today announced its formal backing of trade credit insurers with £10 billion in Government guarantees.[Read our update July 2020 update on the scheme here]
The Trade Credit Reinsurance scheme will see the vast majority of trade credit insurance coverage maintained across the UK. This will be a major boost to businesses and demonstrates that the UK Government recognises the critical role credit insurance plays in allowing companies to trade on credit terms with confidence.
Business Secretary of State Alok Sharma said the £10 billion guarantee “gives peace of mind to businesses, allowing them to continue to trade and maintaining liquidity in supply chains”. It will be seen as a key driver in kick-starting the economy, since trade credit is key in B2B transactions.
Of course this is the headline announcement, and we will keenly await more details from credit insurers explaining what this means at delivery level.
It is not a blanket cover for all businesses, and The Channel Partnership understands that credit insurers will still have to monitor risk and manage exposure where companies are clearly struggling to survive. We expect credit insured companies to be asked to utilise only the level of credit insurance cover they need.
The scheme is available on a temporary basis for nine months until 31 December 2020, backdated to 1 April 2020, with the potential for extension if required.
We are working with all of our credit insurance partners to understand how they will each pass on the benefits of this scheme, specifically to our clients. We’ll provide more details to follow as we hear more.
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