Trade Credit Reinsurance Scheme to End

THE GOVERNMENT and the Association of British Insurers (ABI) are closing the Trade Credit Reinsurance (TCR) scheme on 30 June.

The scheme was used by over half a million businesses turning over £575 billion, providing around £210 billion in insurance cover.

TCR was designed as a temporary solution to companies struggling to get insurance cover for transactions because of the pandemic. It offered government-backed underwriting of trade insurance offered by insurer firms to enable trade, which required insurance but was unable to get it due to the uncertainty caused by the pandemic, to continue flowing.

It is now ending in the context of “a positive outlook for economic recovery in 2021”.

Trade Credit Insurance

Government says there is now an appetite for new business among participating insurers. It says insurers have indicated the scheme is no longer required and they are keen to take back full underwriting control.

Business Minister Paul Scully said: “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.

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.”

It is now important that insurers and businesses continue working together during the transition to ensure any necessary revisions to cover are minimised.

Whilst the government scheme is being wound down, insurers have committed in the joint statement between the government and the ABI to:

• 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
• give adequate consideration in underwriting decisions to a business’s plans for recovery and prospects for future growth, as well as the impact of the pandemic on different sectors and the ongoing nature of government support
• continue to communicate the rationale behind underwriting decisions transparently and in good time

Similarly, during this period the government has committed in the joint statement to:

• 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
• continue to monitor the levels of insurance cover within the market

Following the conclusion of the scheme, 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.

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