The government has signalled that it will pull the plug on its much-criticised credit insurance ‘top-up scheme’ by the end of the year.
In a press conference last week, Lord Mandelson rebuffed calls for the Trade Credit Insurance Top-up Scheme to continue beyond its December 31 end date, saying “the scheme we put in place is longer needed”.
Alan Sarling, of Coastal Credit Insurance Brokers Ltd, said he wasn’t surprised that the scheme didn’t work. “It was a case of too little, too late,” he told TTJ. “Some of the major underwriters had only two or three take-ups.”
He said that the situation in the timber sector was more optimistic and that “underwriters are now getting to grips with far more up-to-date information on buyers and have a far more realistic approach to writing cover”.
“Policyholders are finding where they should be and manoeuvring themselves into different underwriters,” added Mr Sarling.
So far, of the £5bn fund ear-marked to help small businesses which had seen their insurance cover diminish, only £18m has been claimed by 72 companies.
Launched in May to help suppliers suffering from the recession-driven withdrawal of trade credit insurance, the scheme has been plagued with criticism.
Earlier this year, John White, chief ex-ecutive of the Timber Trade Federa-tion, said the scheme was “not worth the paper it’s printed on”, adding that he wasn’t aware of any timber compa-nies that had applied.
The low take-up of the scheme has been blamed on its tight restrictions and comparatively high charges. Also, it excludes those businesses that have had their cover withdrawn completely.
“The top-up scheme hasn’t worked and I don’t think it will be missed if it drops out of sight after December,” added Mr Sarling. “If insolvency levels continue to reduce, underwriters will take a more commercial stance.”
