Government confirms credit insurance protection talks
Some EU states have already pledged to back potential losses for credit insurance firms, allowing them to maintain coverage
Pressure is mounting on the government to follow the likes of Germany and France and support the UK's credit insurance industry.
Some of the largest credit insurers in the channel suggested they may cut cover for some businesses earlier this month, as they look to reduce their exposure amid the pandemic.
A number of EU states have taken steps to prevent credit insurers for doing this by providing them financial assurances.
A Treasury spokesperson acknowledged that the government is assessing the situation in a statement published by the Financial Times this morning.
"We've implemented an extensive set of business support measures to provide businesses with confidence to continue trading with one another as the economy recovers," they said.
"However we understand the concerns around the trade credit insurance market and are urgently discussing these with insurers, business groups and the UK regulators."
The German government have created a "protective shield", according to Euler Hermes, which will guarantee compensation payments from insurers to the tune of €30bn (£26m).
In exchange credit insurers will transfer 65 per cent of their premiums to the German government this year and cover losses of up to €500m, as well as bear default risks beyond the €30bn provided by the government.
"The agreement we have now reached enables us to maintain our cover for precisely these previously healthy companies, prevent chain reactions and thus make an important contribution to the German economy and companies," Euler's German boss Ron van het Hof said.
Meanwhile in France three schemes have been launched at a combined value of €12m to protect businesses.
Deals have been reached in other countries, including Belgium and the Netherlands.
Earlier this week Sky News reported that the government is in discussions with insurance industry executives.
The Association of British insurers said they were seeking "temporary support" from the government.
Target Components boss Paul Cubbage recently told CRN that credit insurers had seen him a list of VARs that they were intending to cut coverage for, but said they were yet to do.
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Government confirms credit insurance protection talks
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