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British trade groups call on government to extend credit cover

The British Retail Consortium has lobbied the UK government to extend the scheme that offers trade credit insurance to retailers struggling in the pandemic. 

The Trade Credit Reinsurance (TCR) scheme, first introduced by the UK government in May 2020, offered coverage for businesses so that they could trade with confidence during the worst months of Covid-19, including government mandated lockdowns.


The scheme was extended on 29 December 2020 to 30 June 2021, and fears from the retail sector are now increasing as the government and the Association of British Insurers confirmed on 26 May that the scheme would end on the planned date.


“The withdrawal of the government’s Trade Credit Reinsurance Scheme threatens the stability retailers are only just beginning to regain. The scheme’s planned closure on 30 June, at the same time as the end of the rent moratorium and the reduction in support available via the Coronavirus Job Retention Scheme, will expose retailers to potentially severe consequences,” comments Tom Ironside, director of business and regulation at the British Retail Consortium.


The TCR scheme offers specialist insurers financial protection so they can cover suppliers if their customers were to default on payment.


The scheme is due to end at the same time as the ban on rental evictions, implemented by government in March last year to protect tenants who had fallen into arrears.


Withdrawal of support exacerbates concerns surrounding business’ ability to secure cover after the conclusion of the scheme, despite insurers indicating the scheme would no longer be required and that they were happy to take over underwriting responsibilities.


Paul Scully, business minister, has said: “The Trade Credit Reinsurance scheme has been a huge success story, with the government and insurers working closely together to back more than half a million businesses, protecting jobs and providing confidence through the pandemic.”


But despite the retail sector bouncing back, somewhat, since lockdowns were eased in mid April, concern is mounting that insurers will base risk assessments on retailers latest financial performance and outlook.


“Our members have already received reports from a range of suppliers that large insurers will remove cover when the scheme ends in June. Insurer requirements of six months of consistently good performance trading data before reassessing credit decisions are impossible for many given the forced closure of non-essential retail. The government must consider extending the scheme until at least the autumn to meet these requirements and give retailers the necessary breathing space to recover,” adds Ironside.


According to a government news story, the TCR scheme provided approximately £210bn in insurance cover.


Insurers participating on the scheme include American International Group UK, Atradius UK, Coface UK Branch, Nexus Trade Credit, among others.

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