On the 29th December 2020 the UK Government confirmed that the Government support scheme for trade credit insurance has been extended through to June 2021.
The Trade Credit Reinsurance Scheme ensures that trade credit insurance coverage and credit limits are maintained during the coronavirus pandemic, helping businesses to trade with confidence. The scheme has been extended by 6 months to 30 June 2021 and approved under relevant state aid rules.
Towards the end of April 2020, it was reported that the UK government was considering the implementation of a temporary reinsurance backstop for trade credit to prevent the widespread withdrawal of cover across sectors. As the outbreak of COVID-19 continued to spread and businesses remained closed for significant periods of time, many companies were left struggling to pay bills, and concerns arose over potentially large decreases in the availability of trade insurance, or premiums increasing to unaffordable levels.
In response, the UK government confirmed that the trade credit insurance market would receive support through the Trade Credit Reinsurance Scheme. Under the scheme, first confirmed in June 2020 and backdated to April 1, the government agreed to offer up to £10 billion in guarantees to ensure that trade credit insurance continues to be available to businesses in the UK.
14th May 2020 - UK Government Support for the Trade Credit Industry
4th June 2020 - Government Support for Trade Credit Insurers confirmed
11th September 2020 - Government Support Scheme for Credit Insurance Goes Live
Commenting on the extension of the Trade Credit Reinsurance Scheme, Graham Walsh, the ABI Senior Policy Adviser for General Insurance said:
“Maintaining trade credit insurance cover between suppliers and their clients is a key component in enabling the UK economy to overcome some of the challenges arising from the pandemic. We’re pleased to have been able to help the Government agree on an extension to the scheme, meaning UK businesses can continue to benefit from a greater level of protection from trade credit cover than might have otherwise been possible.”
The scheme, which is to be delivered through a reinsurance agreement, is available to all insurers currently operating in the UK marketplace, and covers both domestic and overseas trade with payment terms of up to two years. The surety market, which provides bonds, is not involved.
Please take a look at our earlier posts for further information and do get in touch if you would like more detail.
Click the following link for the Government page with the announcement: https://www.gov.uk/government/publications/trade-credit-reinsurance-scheme#history