The Government has bowed to business pressure and amended its trade credit insurance top-up scheme revealed in April.
The scheme has been extended so that businesses that have had their cover withdrawn since October 1 last year will be eligible. Until now, only those retailers which had cover withdrawn from April 1 onwards were eligible.
Retailers have welcomed the change, which will allow “many more firms” to purchase top-up cover, but the British Retail Consortium said its does not go far enough.
British Retail Consortium business environment director Jane Milne said: “The Government’s decision to extend the eligibility of the trade credit insurance top-up scheme is a welcomed move. But it should be back dated to last April, when insurers began removing cover as the downturn started to bite.”
Since May 1, companies that have had their credit insurance cover reduced have been able to purchase six months top-up cover under the £5bn Government Scheme.
Business Secretary Lord Mandelson said: “This extension will give more small and medium sized businesses flexibility to respond to a reduction in their credit insurance cover. We are acting decisively to help more businesses and allow them the breathing space to adjust their business models in response to the current climate.”
CBI director general Richard Lambert said: “This change, which the CBI called for, gives more help to those businesses left vulnerable without sufficient trade credit insurance cover since the autumn. Restoring confidence is critical to improving the economy, and this gives companies more certainty about their ability to trade.”
The Government also revealed that credit insurance firm HCC will join Euler Hermes, Atradius and Coface as a provider of the Government Scheme.
The scheme, which runs until December 31, allows suppliers to purchase Government-backed insurance to either restore cover to the original level or double the amount they are able to obtain from the private sector up to the value of £1m, whichever is the lower.
Milne added: “The Government needs to put more pressure on insurers to undertake more detailed research to ensure underwriting decisions are more accurate and there’s an improvement in customer service.”