Limits changed and prices halved after low take up of cover
The government’s trade credit insurance top-up scheme offering up to £5bn to help protect suppliers has provided only £7m of assistance to 52 companies, so is being widened the FT reports.
Department for Business Innovation and Skills (BIS) changes:
- Price of the top-up cover will be reduced from 2% to 1%
- £20,000 lower limit on top-up cover will be removed
- Upper limit on top-up cover will be increased from £1m to £2m
“The scheme is £5bn, but we have never assumed that it would get to that level. That’s the amount in the programme should there ever be sufficient demand,” the BIS said.
Four insurers involved
The four largest credit insurers Euler Hermes, Atradius, Coface and HCC all take part in the scheme.
The British Retail Consortium, the trade body for retailers, said the scheme needed to be backdated until April 1, when insurers began removing cover.
The BIS said: “Evidence indicates that businesses are adapting to reductions in their insurance by managing their credit risks more actively, thereby reducing their dependence on the product.”
BIBA still has concerns
The British Insurance Brokers' Association (BIBA) said it welcomed the changes and would continue to work with BIS, Treasury, insurers and its members to highlight issues.
Steve Foulsham, BIBA technical services manager, said: "Our members have highlighted that there remains the issue of insurers withdrawing cover, rather than reducing limits. BIBA believes the government should do more to help these businesses who are now completely exposed and are not helped at all by the current top up scheme.
"BIBA is also concerned with the fact that the scheme is due to cease in December. The take up under the scheme so far has been poor and we will wait to see if these changes provide greater support for businesses."
