“This reinsurance scheme will see the government and insurers working closely together to ensure that the vast majority of this cover remains in place”
Today the government has announced a £10bn guarantee for the Trade Credit Insurance industry, allowing them to continue to support business to business trade. The guarantee is offered for an initial period of 9 months, backdating to 1st April 2020 (subject to state aid approval).
Trade credit insurance is used by thousands of UK businesses to support business to business trade on credit terms. As well as providing cover against non-payment from customers, having a trade credit insurance policy in place can allow insured businesses greater access to funding through the likes of Invoice Finance. Restrictions in insurance cover can also impact working capital.
Over the previous two months, we have seen a reduction in appetite from insurers due to the uncertainty of COVID-19 and the expectation that we will see an uplift in default and insolvencies in the coming months.
The additional government support provides some certainty about further blanket reductions in cover and we are also of the opinion that this support for the supply chain will ultimately see a more rapid economic recovery in the UK as a result of this intervention.
At TL Dallas Trade Credit, we very much look forward to seeing the positive impact this will have for our clients and the wider UK economy.
Read the official Government announcement here.