The temporary Trade Credit Reinsurance (TCR) scheme will close as planned on 30 June 2021, it has been confirmed.
The Government said the scheme had benefitted over half a million businesses and provided certainty throughout the pandemic, but is no longer necessary.
The TCR scheme launched in response to the coronavirus outbreak last year amid concerns that companies were being refused insurance cover for transactions. Trade credit insurance – described as the “key to successful trade” – protects businesses from losses should a customer become insolvent.
But due to the unprecedented financial pressures created by the pandemic, it became almost impossible to continue offering trade credit insurance.
In response, the Government agreed to act as a reinsurer to the trade credit insurance industry, meaning losses would be shared among both parties.
However, it has now been confirmed that the scheme will cease to exist from 30 June 2011 “in the context of a positive outlook for economic recovery in 2021, appetite for new business among participating insurers and the continued success of the vaccine rollout”.
According to the Government, the scheme supported some half a million businesses and protected more than £575 billion of business turnover by providing around £210 billion in insurance cover.
Commenting on the scheme, 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, added: “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.”
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