Trade credit insurance is bought by suppliers to make sure they get paid even if their customers default and cannot pay the bills.
There had been fears that insurers could remove cover on companies as the COVID-19 crisis threatens business survival. The Treasury was also concerned that premiums for existing trade credit insurance could rise to unaffordable levels.
GIMA has reported that suppliers will now be able to get vital insurance more easily. By the end of May, the government will provide guarantees for all currently available trade credit insurance.
The Treasury confirmed that whilst final details are still being worked out, the final agreement will see risk shared “appropriately” between the government and insurers. This backing will provisionally run until the end of this year.
Vicky Nuttall, GIMA Director, welcomed the government-backed trade credit insurance guarantee. She said, “it will help to ensure the continued supply of product, and more importantly cash, flowing through our industry. At a time when suppliers are in desperate need of payments, this additional guarantee will give them the confidence to continue to trade.”