Struggling road haulage firms are in line to benefit from the government’s new £10bn insurance guarantee to protect firms during the Covid-19 pandemic.
Trade credit insurance covers businesses when customers delay or default on their payments, as has happened frequently during the Covid-19 pandemic. This has led to fears that the insurance sector would have to withdraw such policies or raise premiums to unaffordable levels.
Now the government has agreed to provide a backstop of up to £10 billion for the sector through its new Trade Credit Reinsurance Scheme.
The news was welcomed by the Road Haulage Association (RHA), which last week revealed that most road haulage firms were struggling during the pandemic.
Its chief executive, Richard Burnett, said: “The RHA has been lobbying government tirelessly on this issue and today’s news will come as a shot in the arm for thousands of road transport operators.
“If the economy is to get back to its pre-pandemic levels, supply chain confidence is vital and we are pleased that our efforts to achieve this have, quite literally, paid off.”
Boosting the economy
Earlier in June, an RHA survey of 600 road freight firms found that 16% feared they could collapse within the next four weeks. While many had made use of Government loans and furlough schemes, there was still widespread concern about the future financial security of the sector.
The new scheme is provisionally expected to last until the end of the year, and will cover trading by domestic firms and exporting firms. The details have not yet been worked out, but are expected to be in place by the end of June.
Business Minister, Paul Scully, said: “Giving businesses the confidence to continue trading is vital to seeing us through this crisis. This guarantee will be essential as we seek to reopen new sectors of the economy and get the UK back to work in a way that is safe for everyone.”
Is your firm covered by trade credit insurance? Does the Government backstop give you confidence for your company’s future?