Trade Credit Insurance provides cover to hundreds of
thousands of business to business transactions,
particularly in non-service sectors, such as manufacturing
and construction. It insures suppliers selling goods
against the company they are selling to defaulting on
payment, giving businesses the confidence to trade with one
another. But 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to pay bills, they risk having credit insurance withdrawn,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 Economic Secretary to the Treasury, said:
This country’s businesses are crucial in helping us to
kick start the economy as we get back to work, and I will
do everything I can to help support them through this
difficult time. By guaranteeing business-to-business
transactions currently supported by Trade Credit
Insurance, we will help to maintain a vital cog in our
economy.
This is on top of an unprecedented package of support we
have put in place to help protect individuals, businesses
and the economy.
Business Minister, , said:
Giving businesses the confidence to continue trading is
vital to seeing us through this crisis. This guarantee
will be essential as we seek to reopen new sectors of the
economy and get the UK back to work in a way that is safe
for everyone.
The guarantee will be delivered through a temporary
reinsurance agreement with insurers currently operating in
the market.
The government will work 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 this month.
The guarantee will be temporary and targeted to cover CV-19
economic challenges, and will provisionally last until the
end of the year. It will be followed by a review of the TCI
market to ensure it can continue to support businesses in
future. Further details will be announced in due course.
- in whole of 2018 £450 million was paid in TCI premiums
to cover over £350 billion in business activity
- as of April 2020 there was over £171 billion business
activity insured, covering transactions between around
13000 suppliers and 650,000 buyers
