Government-backed guarantee facility extended: capacity in the private trade credit insurance market can be maintained
Following EU approval, access to the DKK 30 billion guarantee fund facility administered by EKF on behalf of the Danish government has now been extended until 30 June 2021.
How the scheme works
Under normal circumstances, trade worth around DKK 450 billion is credit-insured in Denmark annually. The government-backed guarantee fund facility worth DKK 30 billion ensures that trade credit insurers in Denmark will be able to maintain their customary insurance capacity until 30 June 2021. The scheme is open to firms offering short credit periods of up to 180 days..
How to access the scheme as a business
Danish businesses seeking trade credit insurance for their transactions should contact one of the four following trade credit insurers:
In October, the Danish government and a wide majority of parties represented in Parliament reached agreement on new relief packages for Danish businesses.
One of the relief measures was to extend EKF's government-backed guarantee facility as a lifeline to companies using the four private trade credit insurers: Atradius, Coface, Euler Hermes and Tryg Garanti. The extension has just been approved by the EU, enabling the guarantee facility to remain active until 30 June 2021.
Under this sovereign guarantee scheme, the Danish government assumes a percentage of the private trade credit insurance companies' risk of loss from business-to-business trade. Meanwhile, private trade credit insurers will be able to maintain their underwriting capacity on the Danish market during the CV-19 crisis. This means that Danish businesses are less likely to be turned down when seeking to credit insure their transactions.
The increased demand for trade credit insurance has arisen because the crisis is constraining companies worldwide, causing cash flow problems and insolvency. Corporate creditworthiness has been impaired, and the elevated risk means that new business-to-business transactions risk going uninsured.
"It is crucial for us to continue to ensure that our customers retain access to the necessary insurance capacity in an unprecedented market situation. We take pride in being able to help support Danish companies in maintaining their B2B trade and jobs," came the joint statement from Atradius, Coface, Euler Hermes and Tryg Garanti.
At EKF, Jan Vassard, Deputy Director, is also pleased by the extension:
"The many relief packages established by governments worldwide have buoyed up the B2B trade. However, it would seem we have to put up with the pandemic for a while yet, so continued access to credit insurance is a vital part of the safety net under the companies," said EKF's Deputy Director, Jan Vassard.