Government bucks up credit insurance ideas

BIS says the improvements will give more firms the chance to benefit from the extra breathing space afforded by the scheme

The government has improved its £5bn credit insurance top-up scheme after figures revealed it has provided just £7m of assistance to 52 companies since its launch in May.

First unveiled in the budget, the scheme allows firms that have had their credit cover cut to purchase six months’ “top-up” cover.

Many firms have been put off by the scheme’s relative expense and in response the Department for Business Innovation and Skills (BIS) has announced that the price of top-up cover will be halved to one per cent.

It has also removed the £20,000 lower limit and doubled the upper limit to £2m.

It is not the first revision to the scheme: in June, the government backdated the programme by six months to boost cash flow for firms whose cover was reduced over the winter.

“Today’s changes will allow more businesses to benefit from this extra breathing space, so that they can adapt to their new circumstances in the longer term,” BIS said in a statement.

The UK’s largest credit insurers - including Euler Hermes, Atradius and Coface – have all supported the scheme.

However, some credit insurance players, including credit insurance broker Aon, warned that the latest revisions still may not go far enough.

Aon said it would like to see the facility extended further, to allow cover where the credit limit has been reduced to zero and to enable companies to buy “permanent” limits of three-six months.