UK Government Launches Trade Credit Insurance Support Scheme - 05/06/2020
The UK Government has formally launched the Trade Credit Insurance Support Scheme (the Scheme) that the industry has been pressing for and working towards since April. This is very good news for Trade Credit Insurance, for business and for the economy and CMR along with all leading UK credit insurers, and the ABI unequivocally welcomes the announcement.
The key focus is to enable businesses to trade with confidence and the backing of the Treasury will provide much needed support for business and allow supply chains to open up as economic activity expands following the gradual easing of lockdown. The Scheme, which is in place now, will run until 31 December 2020 and enables credit insurers to provide capacity based on their normal prudent underwriting practices for the otherwise sound businesses whose solvency is temporarily affected by the COVID-19 crisis.
We have been informed by Atradius that limits will not be 'automatically' reinstated. However, they will continue to offer capacity on a demand led basis, and where customers have firm orders and thereby a business need. They will look at fresh applications in an appropriate and positive way in line with the aims of the Government Scheme.
Regrettably, there are many companies that will not survive the current crisis, and part of our role is to protect customers from exposure to debts that we already know will not be recovered. Although the Scheme is positive, it is not there to cover poor risk and all limits will continue to be reviewed to ensure that exposure is managed in a proactive, positive and professional way, in line with the Government Scheme.
There is no doubt over the coming months the economy faces major challenges, but we see this as a very good news story that needs to be shared and promoted to UK businesses. For all those in the industry who were involved in lobbying the Government, like ourselves, we really appreciate all of your efforts. As an industry we have collectively worked very well together (in conjunction with the ABI) to ensure that UK customers that purchase credit insurance benefit and prosper by being able to continue trading during this unprecedented time of economic crisis.
Chris Hoy, Managing Director of CMR Insurance Services Limited, part of PIB Group, said:
"We're proud to be part of the industry that has taken an active interest and pushed for support from the Government. The Scheme seems to be ideal to help businesses guide their way out of lockdown as they look to gain stability and rebuild. This is a very positive message for the UK trade credit insurance industry and the wider business community."
For further information about the scheme please visit the Government Press Release.