- Belgian federal government and trade credit insurers reach agreement to extend the support scheme to sustain trade
- Despite Covid-19, Belgian businesses continue to benefit from credit limits to secure their commercial transactions
- Trade credit insurers provide cover of EUR40 billion for Belgian companies
BRUSSELS, 8 DECEMBER 2020 – The Belgian federal government, Euler Hermes – the world leader in trade credit insurance – and three other credit insurers have jointly decided to extend their protective shield for the Belgian economy by six months until 30 June 2021. By working alongside the public authorities, Euler Hermes continues to support Belgian companies in overcoming this economic crisis of unprecedented proportions. The agreement protects businesses and their supply chains. Despite Covid-19, the guarantee program allows Euler Hermes to pursue its mission of securing business-to-business trade (B2B).
Trade credit insurance protects B2B companies against the risk of non-payment and indemnifies a policyholder in the event of an unpaid invoice by a buyer. Thanks to this support scheme, credit-insured companies will be shielded from the deterioration of companies’ credit worthiness brought about by the crisis. This in turn will substantially reduce the domino effect that payment defaults can create across the supply chain. It will also ensure that a number of buyers which experience temporary difficulties due to Covid-19 do not face an additional strain from reduction in supplier credit available to them. Both domestic and export B2B transactions of Belgian companies are covered under the support scheme.
Ed Goos, Euler Hermes BeLux CEO: "We are very pleased that we were able to extend the support mechanism by working closely together with the Belgian federal government. Given the persistent pandemic and the unprecedented negative impact of Covid-19, the agreement is an important signal. Trade credit insurance plays a key role in the economy and we as Euler Hermes have committed ourselves to continue to sustain trade in Belgium. Despite significantly increased risks, our customers will be able to continue their business in the coming six months – and this is anything but self-evident in these times.”
In total, trade credit insurers cover more than EUR40 billion of B2B transactions for their Belgian customers in Trade Credit Insurance, Surety and Guarantee policies. The agreement provides for a maximum guarantee from the Belgian federal government of EUR900 million to trade credit insurers until 30 June 2021. The credit insurers are making a significant contribution to the protection mechanism by providing an important part of their premium income to the State.
“Thanks to government support measures of all kinds the economic damage caused by Covid-19 has so far been less than feared. But we see that more and more businesses – even those that were in good financial health before the crisis – are facing cash flow problems due to unpaid invoices from their customers. We expect a record increase of insolvencies in Belgium by more than +10% by 2022”, Ed Goos added.