Mobility sector supported to keep trading as government guarantees Trade Credit Insurance
The government has stepped in to temporarily guarantee business-to-business transactions supported by Trade Credit Insurance amid concerns that policies could be withdrawn or premiums could become unaffordable.
Announced on the 13th May, the latest government intervention is aimed at keeping supply chains that rely on the insurance trading throughout the pandemic.
Trade Credit Insurance covers suppliers against buyers defaulting on their payment and enables companies to trade confidently amongst one another.
As of this April, a reported £171 billion business activity was insured, covering hundreds of thousands of transactions between suppliers and buyers.
With the outbreak of the coronavirus and with more businesses struggling to pay bills however, the Treasury highlighted that there was a risk of businesses having credit insurance withdrawn or premiums increased to unaffordable levels.
In a move to prevent this, the government has confirmed it will temporarily guarantee transactions currently supported by Trade Credit Insurance to ensure the majority of insurance coverage will be maintained across the market.
For businesses in the mobility sector, the announcement means suppliers can continue to trade with the knowledge that they will be protected if a mobility retailer defaults on a payment covered by the insurance.
According to the government, the guarantee will be delivered through a temporary reinsurance agreement with insurers currently operating in the market and full details of the initiative are set to be released at the end of May.
Covering trading by domestic firms and exporting firms, the Treasury indicated that the new initiative will provisionally last until the end of the year.
Commenting on the government’s announcement, James Dalton, ABI’s Director of General Insurance Policy, said: “This is a welcome step by the Government, which mirrors similar action being taken by other countries across the world, which are facing the same issues as the UK trade credit insurance market in these exceptional times. If developed in the right way, this temporary scheme will give reassurance to the thousands of businesses who rely on the security that trade credit insurance cover provides.
“The scheme could help protect the supply chain, safeguard jobs and kick start the economy, boosting business confidence as we begin to emerge from the dark shadow of COVID-19. The priority now is to urgently work through with the government how this scheme will operate in practice so that it can support businesses through the difficult trading environment, now and in the months ahead.”
It comes as the government moves to gradually reopen various sectors of the economy over the coming weeks.https://thiis.co.uk/mobility-sector-supported-to-keep-trading-as-government-guarantees-trade-credit-insurance/https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/05/HM-Treasury-Insurance.jpg?fit=900%2C557&ssl=1https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/05/HM-Treasury-Insurance.jpg?resize=150%2C150&ssl=1Business SupportCoronavirus NewsCOVID-19 Sector NewsCOVID-19 Trade NewsGovernment & Local AuthoritiesNewsroomRetailer NewsSector NewsSupplier NewsTrade NewsABI,coverage,default,guarantee,HM Treasury,insurers,mobility sector,supply chains,Trade Credit InsuranceThe government has stepped in to temporarily guarantee business-to-business transactions supported by Trade Credit Insurance amid concerns that policies could be withdrawn or premiums could become unaffordable. Announced on the 13th May, the latest government intervention is aimed at keeping supply chains that rely on the insurance trading throughout the...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine