BExA joins industry calls for critical government-backed trade credit insurance scheme
As UK businesses struggle to cope with the
fallout of the Covid-19 outbreak, BExA has written to Chancellor Rishi Sunak,
urging government to act swiftly in providing a trade credit insurance scheme
to enable firms to continue
trading and to secure future orders.
Trade credit insurance, as provided by
underwriters, protects businesses against the risk of default by their
customers. For many businesses, this
kind of cover is pivotal to their very existence, but its availability going
forward is likely to be reduced given the expected sharp rise in insolvencies
across many sectors as a result of the current pandemic.
Without the backing of a reliable insurance product, businesses –
especially SMEs – will be unable to offer credit terms and will face severe
cashflow constraints by having to purchase goods on a cash basis or take on
In recent weeks, governments across Europe
have been engaging actively with the credit insurance markets in their
countries to ensure that credit insurance underpins the financial support
measures that these countries have implemented to ease the impact of Covid-19
While BExA and its members have welcomed the
various business and financial support measures that HM Treasury has unveiled
since the start of the pandemic, unlike in other European countries, these initiatives
have not yet addressed the private credit insurance market. As such, UK
businesses are several steps behind their European competitors, pushing UK
trade into an untenable, and potentially irretrievable position.
BExA’s letter to the Chancellor echoes and
wholly endorses proposals that have been put to HM Treasury by various other associations
that also support the UK’s credit insurance community. These proposals
recommend that any potential government support focuses on a
reinsurance solution and
avoids the ‘top-up’ or ‘cap’ facility that was introduced in 2009 during the
financial crisis. They urge the government to introduce these measures immediately.
Posted 24 April 2020