The UK government is "within days" of finalising a deal that would protect the credit insurance industry, according to Sky News.
The report suggests it is close to finalising a multibillion-pound deal that would see it provide a guarantee to trade credit insurance contracts for the duration of the COVID-19 crisis and its aftermath.
Sources told the news outlet that the industry has proposed a reinsurance scheme which would see the government share the risk of providing trade credit insurance with insurers.
Business Secretary Alok Sharma has reportedly held a series of negotiations with insurers to "hammer out" the agreement, with participation from the Financial Conduct Authority and Prudential Regulation Authority
The government last month confirmed it was in talks with major players and regulators in the industry to prevent the withdrawal of credit insurance across a number of sectors. Such a move by the government would add billions of pounds to the cost of various emergency support packages announced since March, the sources added.
Euler Hermes told customers in April that it was "reviewing its credit limit decisions in certain areas" as a result of COVID-19.
The UK government has been under pressure to initiate a protection scheme, particularly after some of its European counterparts, such as Germany, announced generous protection measures.
The Association of British Insurers (ABI) told the outlet that last year credit insurers shelled out £315m to assist firms with bad debts.
"Insurers work closely with their customers, discussing with them where credit limits can be adjusted to help avoid bad debts, but this cannot happen where there is likely to be a sharp rise in insolvencies across many business sectors, such as from COVID-19," it told Sky News in a statement, adding that the availability of trade credit insurance "is likely to be severely reduced in the future".
"We want to avoid this, so we are discussing with the government the scope for temporary state support to ensure that businesses can continue to obtain cover that meets their needs.
"This would see insurers continuing to offer cover, with limited reduction in credit limits to customers, with the government acting as a reinsurer of last resort."
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