The protective umbrella of the federal government and the trade credit insurer to stabilize the supply chain expires as planned on June 30, 2021. From the beginning of July, “normal” market conditions should prevail again for trade credit insurances. The federal government and the credit insurers have agreed that the protective shield for supply chains will expire “as planned” on June 30th. This was announced by the General Association of the German Insurance Industry (GDV). A renewed extension is not necessary in view of the current market and data situation, it said.
Trade credit insurance
Cologne: The protective umbrella of the federal government and the trade credit insurers to stabilize the supply chains expires as planned on June 30, 2021. “As a credit insurer, we are aware of our economic responsibility. Together with the federal government and other credit insurers, we agree that a renewed extension is not necessary in view of current market developments, ”says Petra Riga, Director Commercial Insurance of Zurich Group Germany. “With the protective shield, we made an important contribution to the Corona crisis in order to support our customers in these difficult times. Even without a protective shield, we will continue to provide you with appropriate insurance protection based on a well-founded risk analysis. Of course, we will remain in close contact with the federal government beyond June 30, so that we can react quickly in the event of an economic deterioration and an associated threat to the supply chain. ”
The protective umbrella put in place in spring 2020 has helped to stabilize supply chains and the flow of goods amounting to around 420 billion euros. The insurance companies continue to monitor and evaluate the creditworthiness of customers and thus take on the important function of risk assessment for their customers. In cases of particularly poor creditworthiness, limits may still be reduced or canceled.
With the protective shield, the credit insurers have undertaken to maintain their existing credit limits as far as possible and to participate in the claims payments under the protective shield with 10 percent. The credit insurers bear the default risks beyond the 30 billion euro guarantee from the federal government. In addition, they will transfer almost 60 percent of their premium income for the first half of 2021 to the federal government.
Credit insurance offers protection against payment defaults
A trade credit or del credere insurance protects suppliers in the event that a customer in Germany or abroad cannot or does not want to pay the invoice. If there are bad debts or long-term delays in payment, the invoice will be settled by the credit insurer.
Trade credit insurance – protection against bad debts
Trade credit insurance is an important tool in risk management. Companies take out them to protect themselves against unpaid invoices or outstanding claims. In the course of the corona crisis, the tool came under pressure. The federal government helps out with a protective umbrella, the time after that creates uncertainty.
The protective shield for trade credit insurance was originally set up in April 2020. It was to make sure that the insurers have cover notes for the Corona-Maintain companies hit by the pandemic in order to stabilize supply chains. In return, the federal government assumed a guarantee for compensation payments from the credit insurers in the amount of up to 30 billion euros. Last December, the protective screen was extended by a further six months until the end of June, subject to slightly modified terms.
(Courtesy: Zurich Group Germany)