News

UK Government Support for the Trade Credit Industry

  • Posted On: 14 May 2020

On the 13th May the Association of British Insurers (ABI) and John Glen, Economic Secretary to the UK Treasury, announced that the UK Government has agreed to support the UK Trade Credit Insurance Industry. The support will be HMG acting as a reinsurer, and will last at least until the end of 2020. The detail is yet to be finalised.

The support should help to maintain the capacity of the insurers (the amount of cover they write) and prevent, or at least ameliorate, the feared widespread reduction in cover. The contraction of capacity is likely because of the probable huge increase in business failures in the second half of the year, with some forecasters predicting this to be in the hundreds of thousands. It is being referred to by some commentators as a `black swan' event. At the time of writing, it is too early to say excatly what effect it will have, but we will post updates.

The surety market, which provides bonds, is not involved.

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