Trade Credit Insurance (TCI) provides cover to hundreds of thousands of B2B transactions, ensuring that suppliers are protected against the company they are selling to defaulting on payment. This gives businesses confidence to trade with each other.
Due to the acute economic impacts of coronavirus and companies struggling to pay their suppliers, many businesses risk having TCI withdrawn, or premiums increasing to unaffordable levels. This risks B2B trade seizing-up, particularly in the non-service sectors.
The latest government action
To prevent this from happening, the government will temporarily guarantee B2B transactions currently supported by TCI.
The government’s decision will keep cash flowing within critical supply chains, protect thousands of jobs, and allow many businesses across the UK to restart operations and trading with confidence. For international trade, it will help lower risk for exporters and ensure that UK firms can continue to trade with other countries.
Unpacking the detail
- The guarantee will be delivered through a temporary reinsurance agreement with insurers currently operating in the market. The guarantees will cover trading by domestic 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. For further information, please click here.