The following Banking & Finance guidance note Produced in partnership with Sullivan provides comprehensive and up to date legal information covering:
Coronavirus (COVID 19): HM Treasury announced on 13 May 2020 that businesses with supply chains which rely on trade credit insurance and who are facing challenges maintaining cover due to the coronavirus pandemic will receive support from the government. The government will temporarily guarantee business-to-business transactions currently supported by trade credit insurance and thereby ensure that the majority of insurance coverage is maintained across the market. For more information, see: Businesses struggling with trade credit insurance receive support amid coronavirus (COVID-19)—LNB News 13/05/2020 29.
Insurance plays an important role in trade and commodity finance transactions. While many of the risks inherent in financing trade can be mitigated through effective structuring, including taking security where necessary, insurance provides an additional layer of protection for a financier. For example, security taken over goods that have been financed will be worth less to a financier if some of those goods are damaged or destroyed. Taking out appropriate insurance to protect against the risk of damage or destruction of the goods will protect the financier’s position if such risk should occur.
Additionally, a financial institution might take out insurance in respect of the risk of default by an obligor in order to obtain capital relief in respect of its exposure, or to enable it to finance transactions that might otherwise be prohibited by internal obligor or
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