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The government is to provide guarantees of up to £10bn to trade credit insurance schemes for business-to-business transactions, in news welcomed by contractors.
The Trade Credit Reinsurance Scheme will see the vast majority of trade credit insurance coverage maintained across the UK.
Its creation follows “extensive discussions” with the
insurance sector. The guarantees will be protect businesses if a customer
defaults or delays on payment.
The scheme is available on a temporary basis for nine
months, backdated to 1 April 2020, and running until 31 December 2020, with the
potential for extension if required.
Business secretary Alok Sharma said: “Trade credit insurance is a daily necessity for hundreds of thousands of businesses across the UK – particularly those in non-service sectors such as the manufacturing and construction sectors.
“Our £10bn guarantee gives peace of mind to businesses,
allowing them to continue to trade and maintaining liquidity in supply chains.
This reinsurance scheme is an important step as we carefully set about firing
up our economy as we emerge from the pandemic.”
Welcoming the news, National Federation of Roofing Contractors (NFRC) chief executive, James Talman said: “Roofing merchants and manufacturers will be comforted by today’s government announcement that it will underwrite the trade credit industry with a £10bn guarantee. This policy is a great example of industry and government working together, and we were glad to have supported the working group to develop this.”
He added: “Suppliers to the roofing industry will now be assured that the trade credit market will still be there where they need it, to give them the peace of mind if customers default.”
But Talman called on the government to turn its attention to professional indemnity insurance, which he warned was critical to many principal contractors but that few insurance firms are willing to provide at a reasonable price.