Trade Credit Insurance £10bn Guarantee Gives Assurance to Roofing Suppliers

THE GOVERNMENT has announced it will back business-to-business transactions with a guarantee of up to £10 billion through Trade Credit Insurance.

The Trade Credit Reinsurance scheme, which has been agreed with the insurance sector, will see most of Trade Credit Insurance coverage maintained across the UK.

Trade Credit Insurance underwrites the estimated £350 billion of economic activity of more than 630,000 businesses in the UK each year. It insures suppliers selling goods against the buyer defaulting on payment, giving businesses the confidence to trade with one another.

Due to coronavirus and businesses struggling to pay bills, there is a risk of credit insurance being withdrawn or premiums increasing to unaffordable levels, which could cause serious issues for liquidity and working capital across business supply chains.

Assurance to roofing suppliers

James Talman CEO NFRC

Chief Executive of the National Federation of Roofing Contractors, James Talman, said, “Roofing merchants and manufacturers will be comforted by the Government’s announcement that it will underwrite the Trade Credit Industry with a £10 billion guarantee. This policy is a great example of industry and Government working together, and we were glad to have supported the working group to develop this.

“Suppliers to the roofing industry will now be assured that the trade credit market will still be there where they need it, to give them the peace of mind if customers default.

“Government should now turn their attention to Professional Indemnity insurance which was on shaky ground even before Covid-19. This insurance is critical for principal contractors and is a requirement in many contracts, but there are few firms left willing to provide this at a reasonable price.”

The guarantee will be in place for nine months, backdated to 1 April 2020, and running until 31 December 2020, with the potential to be extended.

The scheme covers both domestic and overseas trade with payment terms of up to two years.

Its rules will require participating insurers to forgo profits during its operation and not to pay dividends or bonuses for senior staff.