British insurers are talking to the government about a backstop for trade credit insurance to support business supply chains hit by the coronavirus pandemic, an industry trade body said.
States such as France, Germany and the Netherlands are giving guarantees to credit insurers in an attempt to keep coronavirus-hit companies afloat, as some firms cut cover for trade in the European Union.
“We are discussing with the government the scope for temporary state support to ensure that businesses can continue to obtain cover that meets their needs,” the Association of British Insurers (ABI) said in an emailed statement on Monday.
Trade credit insurance covers the risk of non-payment if a firm’s customers become insolvent.
The ABI said it had proposed a reinsurance scheme which “would see insurers continuing to offer cover, with limited reduction in credit limits to customers, with the government acting as a reinsurer of last resort.”
British business secretary Alok Sharma held talks with insurance industry executives, including from the ABI and the British Insurance Brokers’ Association, about the plan last week, Sky News reported on Monday.
Britain has already extended its government export insurance scheme to a broader range of countries, as commercial insurers pull out.
For example Tradelock, a unit of trade credit insurer Euler Hermes focusing on British SMEs, has stopped offering cover to new customers.
“We have temporarily stopped onboarding of new customers while we make changes to the platform in the current economic environment,” a Euler Hermes spokesman said.
Steering Group formed to propose Pandemic Response
UK Insurance industry leaders have combined to form a steering group, which will work with Pool Re, with the primary objective to ensure that, working alongside the industry to support customers and communities in the current crisis, the industry can strengthen its response to future pandemics. The first group meeting was held last Friday, 17 April 2020, to agree its objectives.
Chaired by Stephen Catlin (Chairman and CEO, Convex) other members of the group include : Maurice Tulloch (CEO, Aviva), Stephen Hester (CEO, RSA), Julian Enoizi (CEO, Pool Re), Nick Frankland (UK CEO Reinsurance Solutions, Aon), James Nash (CEO, International, Guy Carpenter) and James Kent (CEO, Willis Re). Other participants will be invited to join in due course.
The steering group’s main objective is to propose an industry response to both the government and the country. Pool Re, a world class example of a disaster risk-financing mechanism, will work closely with the steering group to provide structural recommendations. The insurance industry is well placed to support the government, individuals and businesses through its sophisticated claims paying ability and distribution channels. Moreover, the industry can, through its links with academia, provide expertise on how to mitigate risk.
Stephen Catlin said: “The insurance industry needs to be on the front foot in the current situation, paying claims quickly and continuing to provide people and businesses with the protection they require. Most importantly we need to find an industry solution for future pandemics and this group has many years of combined industry experience.”