The Trade Credit Reinsurance (TCR) scheme will be shut down as planned on 30 June 2021, the Government has confirmed.
It comes after participating insurers – including Zurich, AIG, and others – indicated that the scheme “is no longer required” and “are keen to take back full underwriting control”.
Trade credit insurance provides cover for businesses if customers who owe money for products or services do not pay their debts or pay outside the terms of their contract.
During the pandemic, however, the insurance industry was hesitant to cover businesses due to the unprecedented economic environment.
The TCR scheme was introduced in response to the outbreak, ensuring that businesses would continue to be covered. Under the scheme, the Government would guarantee up to 90 per cent of trade credit insurance-related losses, while the insurance industry would cover just 10 per cent.
To date, the temporary scheme has benefited over half a million businesses, protecting more than £575 billion of business turnover by providing around £210 billion in insurance cover.
Commenting on the closure of 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: “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.”
More information on the Trade Credit Reinsurance scheme can be found here.
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