Ministers announce government-backed temporary reinsurance scheme to boost economic recovery
The Scheme is a recognition of the pivotal role played by credit insurers in modern trade and provides support to thousands of businesses who rely on trade credit insurance
Leading Trade Credit Insurer Atradius welcomes today’s announcement by the Department for Business, Energy and Industrial Strategy that the UK Government has launched a temporary, government-backed reinsurance scheme to help businesses recover from the impacts of Covid-19. The scheme aims to help speed up the economic recovery, by ensuring the continued availability of trade credit insurance in the face of unprecedented financial pressures currently being experienced across most business sectors.
The scheme reflects similar state-backed support being developed across Europe and in Canada and enables insurers to provide capacity based on normal underwriting practices for the otherwise sound businesses whose solvency is temporarily affected by the Covid-19 crisis. Maintaining cover as far as possible between suppliers and their clients will be a key ingredient in allowing the UK economy to overcome the challenges of the current crisis.
Thousands of UK businesses rely on the security of Trade Credit Insurance, which protects them if customers in the supply chain who owe money for products or services do not pay their debts or become insolvent. Insurers provide valuable credit management support to their customers, advising and providing information on the financial strength of firms they are trading with.
The launch of the Scheme follows weeks of intensive discussions between the Trade Credit Insurance industry (including Atradius) and the Government. The engagement with Government has been largely led and brokered by the Association of British Insurers (ABI) who have played a significant role in arriving at the successful outcome and delivering a Scheme which we are confident will help UK businesses to navigate the economic challenges ahead as we emerge from lockdown.
Under the temporary Scheme, the Government will act as a reinsurer to the trade credit insurance industry, sharing the risk of losses arising from business insolvency with insurers. The Scheme is structured with the purpose of supporting companies to resume trade and enable supply chains to function normally.
Alun Sweeney, Regional Director UK & Ireland at Atradius said:
“We have recognized from the very beginning of this Covid-19 crisis that the consequences for a trade would be significant and we very much welcome this positive and supportive response from the Government. As an industry, we remain aligned in regard to the need for this kind of action and together with our colleagues at the Association of British Insurers we have been committed to make it a reality. The Scheme is an essential measure to help boost our economic recovery, help protect the supply chain, safeguard jobs, and increase business confidence and will make a real difference to the thousands of businesses who rely on the security that trade credit insurance cover provides”.