Euler Hermes welcomes landmark UK state support scheme

 

  • Landmark £10bn support scheme agreed between government and private sector insurers
  • Businesses will continue to benefit from extensive credit cover as economy emerges from lockdown

LONDON, 04 JUNE 2020 – Euler Hermes, the world leader in trade credit insurance, welcomes the UK government’s agreement to support intercompany trade by guaranteeing transactions insured by trade credit insurers.

This state support scheme is the first of its kind in the UK and is the result of close co-operation between HM Government, the Association of British Insurers (ABI), and private trade credit insurers. It enables the insurers to continue to provide extensive cover to their clients, and pursue their mission of securing B2B trade in the face of the unprecedented challenges to supply chains posed by Covid-19.

Milo Bogaerts, chief executive of Euler Hermes UK and Ireland, said; “Through this landmark agreement the public and private sectors are joining forces to support ‘UK plc’ by maintaining liquidity and confidence in the intercompany trade credit market. This will help our customers through this difficult period, help them to remain competitive, and allow them to take every opportunity to restart trading with confidence as the UK economy emerges from lockdown.”

The scheme will provide a £10bn guarantee, covering 90% of B2B trade credit insurance transactions from 01 April 2020 until the end of this year, with a review at the end of September on potentially extending it. Trade credit insurers are making a significant contribution to the scheme; they will share 90% of their premiums with the state and commit to maintain extensive credit coverage to their clients. All UK-domiciled businesses with a trade credit insurance policy are covered for both their domestic and export trade.

Trade credit insurance covers B2B companies against the risk of late or non-payment. The current crisis brings with it a significant increase in unpaid invoices and risk of non-payment due to the considerable deterioration of companies’ credit worthiness in the UK and around the world.

By allowing the insurers to maintain insurance cover, this scheme will shield credit-insured companies from these risks and this will substantially reduce the domino effect that payment defaults can create across the supply chain. It will also ensure that a number of buyers which experience temporary difficulties due to Covid-19 do not face an additional strain from reduction in supplier credit available to them.

As of April 2020, the UK’s trade credit insurers provided cover for £171bn of business activity, covering 13,000 suppliers and 650,000 buyers, according to the ABI.

Milo Bogaerts added: “The shared commitment from credit insurers and the public sector helps to minimise the impact when trading and maintain liquidity and trust across the supply chain. Credit insurance is a vital tool that allows companies to trade with each other in confidence. This scheme will undoubtedly have a positive impact on the UK economy and save companies from insolvency.”

Euler Hermes introduced several measures at the end of March to support its clients, such as a longer payment period for insurance premiums and extending the claim notification period.

 

MEDIA CONTACTS

Euler Hermes

Adrian Russell    
+44 (0)20 7860 2728    
adrian.russell@eulerhermes.com


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