The government will support businesses whose supply chains rely on Trade Credit Insurance and are finding it difficult to maintain cover amid the pandemic, the Economic Secretary to the Treasury has announced.
Trade Credit Insurance provides cover to business to business transactions, particularly in non-service sectors, such as manufacturing and construction.
It insures suppliers against companies defaulting on payment, but due to the pandemic, businesses are at risk of having their credit insurance withdrawn, or facing increased premiums.
In light of this, 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”.
The guarantee will be delivered through a temporary reinsurance agreement with insurers currently operating in the market, and the government will work alongside businesses and the industry on the full details.
The guarantees will cover trading by domestic firms and exporting firms, and the government hopes that agreements will be in place with insurers by the end of this month.
Nonetheless, the guarantee is temporary in light of the ongoing crisis, 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.
The Economic Secretary to the Treasury, John Glen, 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.”
Business minister Paul Scully 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.”