Government to support businesses with trade credit insurance guarantee


Trade credit insurance covers hundreds of thousands of business-to-business transactions, especially in non-service industries such as manufacturing and construction. It insures suppliers who sell goods against default by the company they are selling, giving companies the confidence to trade with each other. But due to the coronavirus and companies struggling to pay their bills, they risk having their credit insurance taken away or premiums rising to unaffordable levels.

To prevent this from happening, the government will temporarily guarantee the business-to-business transactions currently supported by trade credit insurance, ensuring that the majority of insurance coverage will be maintained throughout the market. This will support supply chains and help businesses trade with confidence, as they can be confident that they will be protected if a customer does not pay.

Economic Secretary to the Treasury John Glen said:

Businesses in this country are crucial in helping us get the economy going as we get back to work, and I will do everything I can to help them through this difficult time. By securing the business-to-business transactions currently supported by trade credit insurance, we will help maintain a vital cog in our economy.

This is in addition to an unprecedented set of supports we’ve put in place to help protect individuals, businesses and the economy.

Business Minister Paul Scully said:

Giving businesses the confidence to continue negotiating is essential to help us navigate 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 safe way for all.

The guarantee will be provided through a term reinsurance agreement with insurers currently operating in the market.

The government will work with business and industry on all details of the program to ensure that businesses are supported and that risks are appropriately shared between government and insurers.

The guarantees will cover the trade of domestic and exporting companies and the intention is that agreements will be in place with insurers by the end of this month.

The guarantee will be temporary and targeted to cover the economic challenges of CV-19, and will last provisionally until the end of the year. This will be followed by a review of the ICT market to ensure that it can continue to support businesses in the future. Further details will be announced in due course.

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BCC CEO Adam Marshall said:

The government has shown once again that it listens to the concerns of our business communities.

The launch of a government-backed guarantee to support the provision of trade credit insurance will help ensure that this vital lifeline remains available to businesses during and after this crisis, thus helping to maintain business chains. supply and trade.

CBI Chief Economist Rain Newton-Smith said:

The government’s decision to support trade credit insurance will protect thousands of jobs and allow many businesses across the UK to resume operations.

This intervention will keep cash flow within critical supply chains and, more importantly, it will help reduce risks for our exporters and ensure UK companies can continue to trade with other countries.

The implementation of this program is crucial as the UK economy gradually picks up, while keeping public health as a top priority.

FSB National President Mike Cherry said:

As the pandemic continues to strike, small businesses need all the help they can get to continue doing business nationally and internationally. This term reinsurance program should mean that small businesses have not withdrawn their credit insurance and should be able to continue to access affordable insurance to support trade with other businesses.

The intervention gives small businesses the confidence they so badly need to get back on their feet and start trading again as we enter the recovery. This protection will be particularly useful for small businesses operating in supply chains in sectors such as construction and manufacturing. We look forward to working with government and the insurance industry to get this program up and running as quickly as possible and to ensure it helps small businesses trade with confidence.

  • over the whole of 2018, £ 450m was paid in TCI premiums to cover over £ 350bn of business activity
  • as of April 2020, over £ 171 billion in business activity was insured, covering transactions between around 13,000 suppliers and 650,000 buyers

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