Nigel Birney, Head of Trade Credit at Willis Towers Watson has urged the Northern Ireland Executive to lobby the UK government and press them hard to act immediately and implement proposals put to them by UK Credit Insurers for a scheme to assist the trade credit insurance sector to continue to provide cover on companies caught in the middle of the Covid19 emergency.
The call comes as all credit insurers are now actively reviewing downwards the ratings on specific UK, Irish and foreign companies who they feel have been most adversely affected by Covid19, cancelling or significantly reducing available limits.
LOBBY: Nigel Birney, Head of Trade Credit at Willis Towers Watson
Without trade credit insurance in place, companies expose themselves to huge risks including non-payment as the companies that they are supplying into go bust or have elongated payment terms which places a significant strain on cashflow.
The Northern Irish export market is one area of the economy which relies heavily on the safety net of having trade credit insurance in place when selling goods overseas. It is expected to grind to a halt without government action.
In many cases, credit insurance is also taken as collateral by banks and commercial funders to facilitate the provision of working capital facilities. Access to such facilities is going to be critical once the economy is fully open for business again.
Already, several Governments across Europe including Germany, France and Denmark have agreed schemes with the EU to stabilise their own internal credit insurance market.
The UK Government is now being pressed to make a similar decision as local companies are now exposed, more than ever, and will be at a distinct trading disadvantage if this request for support is ignored.
Nigel Birney, Head of Trade Credit Insurance at Willis Towers Watson said:
“We should not underestimate or ignore the potentially devastating impact the withdrawal of credit insurance cover will have on many NI businesses. We need to see the UK government intervene and shore up the credit insurance sector so that confidence can be restored, and businesses can continue to access trade credit insurance cover which provides that vital safety net.”
“Not being able to get credit insurance is having a destabilising effect on the local economy and we are keen to ensure that this is recognised, particularly by our own Ministers.”
“If the UK Government does not act urgently to support the UK’s credit insurance community the potentially catastrophic commercial effects of Covid19 will be acutely felt by many businesses in Northern Ireland.”
He added:
“Potentially you could have the unpalatable situation whereby a company in Ballymena is unable to get insurance on a business in Portadown because the UK insurer is uncomfortable with the risk profile of the buyer whereas a supplier in Germany could sell to the same buyer in Portadown and the debt would be insured under the German Government backed guaranteed scheme.”