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Coronavirus - Trade Credit Insurance: Extended Government Support - UK

  • United Kingdom
  • Coronavirus
  • Insurance and reinsurance
  • Litigation and dispute management
  • Industrials


What is Trade Credit Insurance?

Trade credit insurance provides cover for businesses who sell goods and services to customers on credit terms, in the event that the customer fails to pay its debt (or later than the credit terms specify).

Trade credit insurance is said to be “the invisible glue that holds industries together”.

What is the Trade Credit Reinsurance Scheme?

In May 2020, the UK Government announced that it would guarantee business-to-business transactions currently supported by trade credit insurance in order to support supply chains and help businesses trade with confidence during the coronavirus pandemic.

The Economic Secretary to the Treasury, John Glen said that introducing the scheme will “help to maintain a vital cog in our economy.”

The objective of the Trade Credit Reinsurance Scheme is to provide targeted support via trade credit insurers, to ensure that trade credit insurers have the confidence to maintain and write trade credit insurance for businesses. The Government’s guarantee to UK credit insurers, via a reinsurance agreement, should give UK companies the confidence to provide goods and services on credit terms, despite the increased risk of non-payment. It covers domestic and export trade and is available to any UK-based company with a credit insurance policy in place, importantly, only where the credit insurer has agreed to sign up to the scheme. It is not a blanket guarantee.

Despite being announced in May 2020, the Scheme was backdated to 1 April 2020 and was initially available on a temporary basis for 9 months, to aid economic recovery.

In June 2020, the UK Government provided more information on the scheme, announcing that it would provide guarantees of up to £10 billion, to trade credit insurers for business-to-business transactions.

Which insurers have participated in the Trade Credit Reinsurance Scheme to date?

The insurers participating in the Scheme are:

  • American International Group UK Limited
  • Atradius UK
  • Coface UK Branch
  • Credendo – short-term non-EU risks
  • Euler Hermes UK, a branch of Euler Hermes SA (NV)
  • Markel International Insurance Company Limited
  • Nexus Trade Credit
  • QBE UK Limited and QBE Europe SA/NV
  • Zurich Insurance plc

Latest Development

Prior to the New Year and the commencement of Lockdown 3.0, the UK Government extended the Trade Credit Reinsurance Scheme to 30 June 2021 to ensure that trade credit coverage and credit limits were continuously maintained during the coronavirus pandemic.

Insured businesses do not need to sign up for the scheme as in-scope policies held with a participating insurer will automatically be eligible for inclusion. However, insureds will want to ensure that they renew with in-scope insurers.

We regularly advise clients in relation to coverage issues under trade credit policies. Please do not hesitate to contact Chris Ives for more information.