Landmark trade credit scheme gets green light

UK businesses will continue to benefit from credit cover as economy emerges from lockdown, following the agreement between the Government and private sector insurers of a landmark £10bn support scheme.

The first of a kind scheme was supported by the Association of British Insurers and private trade credit insurers, and enables insurers to continue to provide extensive cover, and to help secure B2B trade in the face of the unprecedented challenges to supply chains posed by COVID-19.

Welcoming the move, Milo Bogaerts, chief executive of Euler Hermes UK and Ireland, said: “Through this landmark agreement the public and private sectors are joining forces to support UK PLC by maintaining liquidity and confidence in the inter-company trade credit market. This will help our customers through this difficult period, help them to remain competitive, and allow them to take every opportunity to restart trading with confidence as the UK economy emerges from lockdown.”

The scheme will provide a £10bn guarantee, covering 90% of B2B trade credit insurance transactions from 1st April 2020 until the end of this year, with a review at the end of September on potentially extending it.

Trade credit insurers will share 90% of their premiums with the state. All UK-domiciled businesses with a trade credit insurance policy are covered for both their domestic and export trade.

As at April 2020, the UK’s trade credit insurers provided cover for £171bn of business activity, covering 13,000 suppliers and 650,000 buyers, according to the ABI.

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