Government to temporarily guarantee trade credit insurance support

Trade credit insurance provides cover to hundreds of thousands of business to business transactions, particularly in non-service sectors, such as manufacturing and construction.

It insures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another. But due to the coronavirus and businesses struggling to pay bills, the government has cautioned that many risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.

To prevent this from happening, the government said it will temporarily guarantee business-to-business transactions currently supported by trade credit insurance, ensuring the majority of insurance coverage will be maintained across the market.

This is expected to support supply chains and help businesses to trade.

"This country’s businesses are crucial in helping us to kick start the economy as we get back to work, and I will do everything I can to help support them through this difficult time. By guaranteeing business-to-business transactions currently supported by trade credit insurance, we will help to maintain a vital cog in our economy," said Mr Glen. 

According to the government, the guarantee will be delivered through a temporary reinsurance agreement with insurers currently operating in the market.

The government also noted it will work with businesses and the industry on the full details of the scheme to ensure firms are supported and risk is appropriately shared between the government and insurers.

The guarantees will cover trading by domestic firms and exporting firms and the intent is for agreements to be in place with insurers by end of this month.

The guarantee is temporary and targeted to cover COVID-19 economic challenges, and will provisionally last until the end of the year.