Supplier fears eased by credit insurance move

THE Government has stepped in to guarantee trade credit insurance agreements as thousands of businesses struggle to pay their bills.

Suppliers to the manufacturing and construction industries often take out credit insurance to cover themselves in case the company they are selling to becomes unable to pay.

But as the coronavirus pandemic has rocked the economy, insurers have begun to withdraw their cover or raise their premiums as the risk of firms not paying their suppliers has shot up.

The Treasury announced yesterday that to prevent this happening, it would step in to pay any transactions covered by credit insurance where the buyer could not.

The economic secretary to the Treasury, John Glen, said: ‘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.’

As of last month, more than £171bn of business activity was insured, covering transactions between around 13,000 suppliers and 650,000 buyers. The Treasury said the guarantee, which will be delivered though a temporary reinsurance agreement with insurers, would provisionally be in place until the end of the year.