Businesses with supply chains which rely on Trade Credit Insurance (TCI) and who are experiencing difficulties maintaining cover due to Coronavirus will get support from the Government, the Economic Secretary to the Treasury, John Glen, announced today (Wednesday, 13 May).
TCI provides cover to hundreds of thousands of business to business transactions, particularly in non-service sectors, such as manufacturing and construction. It insures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another.
However, due to Coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.
To prevent this from happening, the Government has confirmed it will temporarily guarantee business-to-business transactions currently supported by TCI, ensuring the majority of insurance coverage will be maintained across the market. This will support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on payment.
- 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 COVID-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.
If you or a client are considering applying to any of the Government loan schemes to support your business during this unprecedented time, please contact your usual Beavis Morgan Client Partner or email info@beavismorgan.com.
For further information about the Government measures to protect individuals and businesses, visit our COVID-19: Support for UK businesses hub.