13 May 2020
Businesses with supply chains which rely on Trade Credit Insurance (TCI) and who are experiencing difficulties maintaining cover due to the coronavirus pandemic are to get support from the Government.
The Economic Secretary to the Treasury, John Glen, has announced that it will temporarily guarantee business-to-business transactions currently supported by TCI, ensuring the majority of insurance coverage will be maintained across the market.
TCI provides cover to hundreds of thousands of such transactions, particularly in non-service sectors, such as manufacturing and construction. It insures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another.
However, due to the coronavirus outbreak and businesses struggling to pay bills, there is a risk that they may have credit insurance withdrawn, or of premiums increasing to unaffordable levels.
The Government guarantee will be delivered through a temporary reinsurance agreement, provisionally set to last until the end of the year, with insurers currently operating in the market.
It will cover trading by domestic and exporting firms, and the intent is for agreements to be in place with insurers by the end of this month.
The aim is to 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.
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.”
He explained that the Government will now work with businesses and the industry on the full details of the scheme.