Government has recently announced that the Trade Credit Insurance Scheme is now operational. They now have State Aid clearance and the vast majority of insurers have signed up to deliver the scheme. Contracts with insurers are still being finalised but are expected to be signed by mid-August.
The scheme will:
• Provide temporary support to businesses through trade credit insurers in the form of a reinsurance arrangement to mitigate the economic impacts of Covid-19 on trade credit coverage. The scheme will be back dated to 1 April and run until 31 December.
• See the Government reinsure 90% of insurance claims up to a cap of £3bn total industry insurer losses and 100% of claims between £3bn and £10bn of total insurer losses.
• Put a number of restrictions on insurers meaning they can only withdraw cover where the justification for doing so is not related to Covid-19 economic impacts, to avoid large-scale or bulk withdrawals of cover.
• Support UK businesses. Broadly similar schemes have been implemented in other European Nations such as Germany, France, Denmark, Belgium and the Netherlands
As the scheme operates through Trade Credit Insurers, there is no need for underlying businesses to sign up to the scheme. Any business looking to access TCI should contact either a participating insurer, or an insurance broker who will be best placed to advise them.
If a business has had cover withdrawn, they should first look to their existing provider to reinstate cover (which, in many cases, should be possible now that the scheme is operational). Alternatively, if the existing provider is unwilling to reinstate cover or the insurer is not participating in the scheme, they should look to alternative providers who should be able to provide cover.
Whilst the scheme is intended to address the impacts of Covid-19 on the coverage a business can receive, maintaining underwriting standards are important to maintaining a functioning market. As such, an insurer may still look to withdraw/limit cover. If a business believes they have had cover incorrectly withdrawn, they should look to get this cover reinstated.
If problems persist for members, please do let BFFF know and we can contact Defra as they have confirmed that they would be happy to follow up with scheme leads across Government.