Businesses to get support through trade credit insurance guarantee

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Businesses with supply chains which rely on Trade Credit Insurance and who are experiencing difficulties maintaining cover due to Coronavirus will get support from the government.

Trade Credit Insurance provides cover to business to business transactions, particularly in non-service sectors, such as manufacturing and construction.

It ensures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another.

Due to Coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.

To prevent this from happening, the government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market.

This will 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.

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

The government will be working with businesses and the industry on the full details of the scheme to ensure firms are supported and risk is appropriately shared between the government and insurers.

The guarantees will cover trading by domestic firms and exporting firms and the intent is for agreements to be in place with insurers by end of May 2020.