Trade Credit Insurance

Trade Credit Insurance is a daily necessity for hundreds of thousands of businesses throughout the UK, but it is particularly important for those businesses who operate in non-service sectors. The construction industry falls squarely into that category. It supports billions and billions of pounds of business turnover at any one time, so the recent announcement from the government that it is to effectively underwrite a good proportion is significant news.

It is estimated the Trade Credit Insurance underwrites around £350billion of economic activity in the UK every year, supporting well in excess of half a million businesses in the process. It insures suppliers who sell their goods against the company they are selling to defaulting on their payments and provides businesses with the confidence to trade with one another.

Due to COVID-19 many businesses have struggled to pay their bills on time. This has resulted in a very real risk of credit insurance being withdrawn at a moment’s notice or premiums increasing to unaffordable levels. This could lead to serious liquidity issues and to working capital across business chains.

The government’s scheme, which they have named the Trade Credit Reinsurance Scheme, has been agreed after extensive discussions with the insurance sector will help coverage to be maintained across the UK. The scheme is available on a temporary basis for nine months and, crucially, is back-dated to the 1st April this year. There is also the option to extend it beyond its current deadline of the 31st December 2020 if needed.

As ever, at Kerry London we maintain a close watching brief. Our construction team constantly monitors the state of the market and ensures they always have access to the best products for their clients. If you would like to talk about Trade Credit Insurance please just get in touch on info@kerrylondon.co.uk, or call us on 020 8225 1165. We will be very happy to help.

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