In the News
UK Launches Trade Credit Insurance Scheme
The scheme is available on a temporary basis and is available to insurers operating in the U.K. market.
- David Pilla
- July 2020
The U.K. Treasury said the government is backing trade credit insurance for the country's businesses with a guarantee of up to £10 billion ($12.55 billion) for businesses in response to the COVID-19 pandemic.
The government will provide guarantees to maintain trade credit insurance schemes for business-to-business transactions across the market “in light of COVID-19” by protecting against customer defaults or payment delays, the Treasury said in a statement.
Treasury said the reinsurance scheme is available on a temporary basis for nine months, backdated to April 1, and is available to insurers operating in the U.K. market. There is a potential for extension if required.
We welcome this temporary scheme, which reflects the pivotal role of trade credit insurance in helping businesses to recover from the unprecedented effects of the COVID-19 crisis.
Director, General Insurance Policy Association of British Insurers
The scheme will be followed by a joint review of the trade credit insurance market led by Treasury and the U.K. Department for Business, Energy and Industry Strategy “to ensure it can continue to support businesses in the future,” Treasury said. Treasury said the scheme was developed “following extensive discussions with the insurance sector” and will cover “the vast majority of trade credit insurance coverage maintained across the U.K.”
“Trade credit insurance is a daily necessity for hundreds of thousands of businesses across the U.K., particularly those in non-service sectors such as the manufacturing and construction sectors,” said Business Secretary of State Alok Sharma in a statement. “This reinsurance scheme is an important step as we carefully set about firing up our economy as we emerge from the pandemic.”
“We welcome this temporary scheme, which reflects the pivotal role of trade credit insurance in helping businesses to recover from the unprecedented effects of the COVID-19 crisis,” James Dalton, director, general insurance policy, Association of British Insurers, said in a statement. “Since we alerted the government of the need for it, we have worked closely with them to make it a reality. Maintaining cover as far as possible between suppliers and their clients will be a key component in allowing the U.K. economy to overcome the challenges of the current crisis.”
Over the past two months the ABI said it “and a number of trade credit insurers worked closely with the government to make the case for such a facility given the difficult trading environment for businesses that lies ahead and, in the last few weeks, have been working intensively with the government to agree on the detail.”