Government scraps minimum threshold and raises upper limit to £2m
The government has expanded its £5bn trade credit scheme after admitting that just £1.1m of cover has been taken out since the scheme started in March.
Fifty-two firms have taken advantage of the top-up scheme, in which the government offers up to half of the insurance for firms that have had trade credit cover scaled back.
Last week it announced that it hoped to boost take-up by slashing premiums from 2% of insured goods to 1%. The minimum threshold of £20,000 has been scrapped and the upper limit of cover raised from £1m to £2m.
Biba wants the scheme extended to include firms that have had their cover pulled completely. Biba technical services manager Steve Foulsham said the changes were good news for businesses, but added: “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 businesses that are now completely exposed and are not helped at all by the current top-up scheme.
“Biba is also concerned that the scheme is due to cease in December. The take-up so far has been poor. We will wait to see if these changes provide greater support for businesses.”
A spokesman for Aon said the scheme should also enable companies to buy “permanent” limits of three to six months, so long as the customer continued to pay on time.
The scheme insures a bulk of goods from delivery to payment, rather than covering a supplier’s trading for a set period.
Insurance Times understands the government is concerned about extending the scheme, as it would mean taxpayers’ money guaranteeing firms shunned by credit insurers for being too risky.
A spokesman for the Department for Business, Innovation and Skills said: “This top-up scheme is providing temporary help for businesses as they readjust to changed conditions.
“Our evidence indicates that the majority of businesses are now managing their credit risks actively, reducing their dependence on trade credit insurance.”