Trade credit insurance is a contract bought by suppliers to make sure they get paid even if their customers default and cannot pay the bills. This gives businesses the confidence to trade with one another.
Early in the pandemic, the government introduced a temporary Trade Credit Reinsurance scheme, which was agreed following extensive discussions with the insurance sector. This scheme ensured that the vast majority of Trade Credit Insurance coverage was maintained throughout the pandemic with the government providing financial guarantees.
The government and the Association of British Insurers (ABI) have now confirmed that the scheme will end on 30 June 2021 as planned.
The scheme has directly benefitted over half a million businesses, providing certainty to firms across the UK and safeguarding jobs. It protected more than £575 billion of business turnover by providing approximately £210 billion in cover.
Insurers working under the temporary scheme have confirmed to government that the scheme is no longer required and that they wish to revert to full underwriting control. The government and participating insurers will continue to work together to ensure there is a smooth transition to the private sector resuming its normal role of providing cover.
Once the scheme has ceased, the government will conduct a review of the Trade Credit Insurance market to ensure continued support for businesses in future.