Notice

Joint statement on the closure of the Trade Credit Reinsurance scheme

Published 26 May 2021

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This publication is available at https://www.gov.uk/government/publications/statement-on-the-closure-of-the-trade-credit-reinsurance-scheme/joint-statement-on-the-closure-of-the-trade-credit-reinsurance-scheme

The government’s innovative Trade Credit Reinsurance scheme is set to end as planned on 30 June 2021.

The Trade Credit Reinsurance scheme has seen government partnering with insurers in order to build back better from the coronavirus (COVID-19) pandemic. The scheme has successfully provided stability and confidence to businesses and supply chains across the United Kingdom.

The scheme has directly benefited well over half a million businesses, protecting more than an estimated £575 billion of business turnover through providing around £210 billion in insurance cover in total under the scheme.

Given the positive outlook for economic recovery in 2021, the successes of the scheme in maintaining cover in the credit insurance markets, appetite for new business within participating insurers, and the continued successes of the vaccine rollout now is the right time to begin winding down government support.

The government and participating insurers will continue to work together to ensure there is a smooth transition of cover back to the private sector. Our expectation is that following the end of the scheme the vast majority of businesses will see their insurance cover being maintained. However, it is vital that insurers and businesses continue to proactively engage with one another during this period to ensure any necessary revisions are minimised.

Whilst the government scheme is being wound down, insurers have committed to:

  1. Continue to work closely with policy holders and their clients to understand their insurance needs, whilst proactively seeking out relevant information to inform underwriting decisions.
  2. In underwriting decisions give adequate consideration to a business’s plans for recovery and prospects for future growth, as well as the impacts of COVID-19 on different sectors and ongoing nature of government support.
  3. Continue to transparently communicate the rationale behind underwriting decisions in good time.

Similarly, during this period the government will commit to:

  1. Maintain an open dialogue between insurers and businesses, working collaboratively with both to help ensure the smooth transition of cover back to the private sector.
  2. Continue to monitor the levels of insurance cover within the market.

Following the conclusion of the scheme, over the summer the government will begin work on the review of the Trade Credit Insurance market to ensure that it is leading to fair outcomes for consumers.

In response, Business Minister Paul Scully said:

The Trade Credit Reinsurance scheme has been a huge success story, with the government and insurers working closely together to back more than half a million businesses, protecting jobs and providing confidence through the pandemic.

The scheme allowed trade to continue flowing despite the uncertainty caused by the pandemic, and it is only right that now our economic outlook has improved and businesses are getting back on their feet, the private sector resumes its role of providing insurance cover. I look forward to continuing to work with insurers to deliver the support which businesses need.

Huw Evans, Director General of the ABI, said:

Insurers were pleased to have worked closely and constructively with the UK government on this temporary scheme. At a time when firms needed extra support during the pandemic, the scheme has helped ensure that businesses remained able to insure against potential risks in their supply chain. The scheme has been an excellent example of how government and the industry can work together on solutions to unprecedented market challenges to ensure the continued availability of insurance.

John Glen, Economic Secretary to the Treasury, said:

This scheme has supported millions of jobs at over half a million businesses by giving companies and their supply chains confidence through the pandemic. It has been a significant success, providing nearly £210 billion of cover, and it’s right that trade credit insurance transitions back to the industry now the economy is starting to recover.

Department for Business, Energy, and Industrial Strategy
HM Treasury
Association of British Insurers

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