Germany extends €30bn credit insurance bailout
Source: Commercial Risk, Insurance & Risk Management News
Germany has extended its state-backed €30bn Covid-19 credit insurance guarantee for a further six months to 30 June 2021, after pressure from German insurance buyer association GVNW and insurance association GDV to continue the scheme beyond December.
The extension will allow credit insurers to continue underwriting €400bn of insurance to help businesses protect their supply chains and prevent insolvencies, the GDV said.
The emergency alliance of insurers covered by the scheme includes Atradius, Coface, Credendo, Euler Hermes, R+V and Zurich. Under the agreement, insurers can still reduce or cancel credit insurance where buyers show poor credit development, but will maintain current limits as far as possible, said the GDV.
Insurers will pay almost 60% of credit insurance premiums to government, in addition to 10% of sums paid under the bailout arrangement.
“The emergency arrangement does not give companies carte blanche to enter into risky deals with customers whose financial stability had been questionable even before the Covid-19 pandemic,” said Jörg Asmussen, chairman of the GDV.
The extension of the credit insurance guarantee, which was first launched in April to protect supply chains during the pandemic, is subject to approval by the European Commission.
Mr Asmussen said the GDV estimates that credit limits covered by insurers account for about 15% of German exports and therefore contribute “significantly to the security of Germany’s export sector”.
GVNW president Alexander Mahnke warned recently that insolvencies would likely rise if the scheme was allowed to expire at year-end.