Coronavirus: Government Guarantees Trade Credit Insurance
14 May 2020
Yesterday the government announced it will guarantee trade credit insurance, a move which it says "will help to maintain a vital cog in our economy".
As many businesses have lost income, they have been stranded without the cash to pay for arranged products or services, or themselves have been missing cash owed to them by others.
Trade credit insurance provides guarantees that the insurance company would pay lost income to businesses who were unable to retrieve payment from other businesses during coronavirus pandemic. Many had feared the insurance industry would not be able to pay out on the scale required in the economic downturn.
The government said:
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.