The Government has widened its £5 billion trade credit insurance scheme meaning that more companies can now purchase 'top-up' cover.

Since 1 May, companies that have had their trade credit insurance cover reduced by traditional providers have been able to purchase six months top-up credit insurance from the Government. This top-up credit sits on top of a company's existing credit insurance policy and follows the conditions of that underlying policy.

Key features of the scheme

The trade credit insurance top-up scheme is available to eligible companies in the UK with a trade credit insurance whole-turnover policy. Those companies that have had their credit limit reduced will be able to purchase top-up cover via existing providers, who will administer the scheme on the Government's behalf. The scheme is open to new applicants from 1 May 2009 to 31 December 2009.

Key features of the scheme are as follows:

  • It can be purchased in respect of reductions in cover that have occurred since 1 October 2008, and cover can be back-dated to start from when the reduction took place;
  • Each policy written under the scheme will last for a maximum of six months and will apply to a company's relationship with a particular buyer. It is possible for companies to purchase additional policies to cover relationships with other buyers, provided that the eligibility criteria is met in each case;
  • A company has 28 days to apply to their credit insurance provider for the top-up scheme following a reduction in cover;
  • The value of cover received by a company is linked to the level of cover provided by its underlying credit insurance policy. If the level of cover provided by the underlying policy changes during the six-month period, the level of top-up cover will also change accordingly.


The scheme is available to all companies that hold a whole-turnover trade credit insurance policy provided that:

  • its trades take place in the UK with payment terms of no more than 120 days;
  • the original level of cover was in place for at least 30 days before it was reduced;
  • the reduction in the level of cover occurred on, or after, 1 October 2008;
  • the reduction in the level of cover was instigated by the credit insurance provider – not at the request of the company.

Level of cover

Companies are able to purchase insurance to the value of the lower of the following amounts:

  • the amount equal to the reduced level of cover offered by the underlying credit insurance policy;
  • the amount which restores the level of cover to the amount the company received previously;
  • £1 million.

Companies must purchase a minimum amount of £20,000 cover. The price payable by a company for its six-month top-up policy will be calculated at a rate of two per cent of the level of cover provided under the scheme.


It is understood there are currently four credit insurance providers which operate the Government top-up scheme (although others are expected to join). These are:

  • Atradius Credit Insurance N.V
  • Coface S.A
  • Euler Hermes UK PLC
  • HCC


The Government hopes that the scheme will ease the strain on businesses suffering as a result of the reduction in trade credit insurance; however, some have questioned whether the scheme goes far enough.

Many in the retail and finance sectors have expressed disappointment that the scheme only covers limit reductions - it does not address the needs of companies whose limits have already been withdrawn as opposed to reduced.

The scheme closely reflects "Le CAP" in France, which was introduced towards the end of last year. However, the UK scheme is more expensive – rated at 4.6 per cent per annum on the limit, compared to an annualised rate of 1.5 per cent in France. Many experts are under the suspicion that, as in France, the scheme will be met with much excitement, but may not prove to be hugely successful.

Despite these criticisms, insurance experts recognise the importance of any scheme which enables the trading door to remain open in the current economic climate – even if it only provides short-term relief.

Arguably, the scheme's scope could be widened further to address the needs of even more companies - however, one insurance expert questioned whether insurers could manage the scheme in a broader format: "companies' profiles have changed so radically that trying to provide a relevant solution is a huge challenge – the scheme is a way to facilitate trade and this is what you have to look at right now."