Credit insurers mock government underwriting plan

Britain’s three biggest credit insurers are at loggerheads with Baroness Vadera, minister for small business, over her plans to overhaul the industry in the wake of the credit crunch.

Baroness Vadera, who recently hit the headlines with her “green shoots” economic revival remarks, has been talking with the industry since November. Credit insurers protect suppliers against losses if their customers fail to pay bills.

She is pushing proposals under which the Government underwrites 50 per cent of any credit insurance risk, in situations where cover would normally be withdrawn by the biggest players. These are Euler Hermes, Atradius and Coface.

“She came to us – not the other way round,” said a leading credit insurer. “The plans on the table at the moment are a joke. They’ve been tried in France and they haven’t worked. Unless there is a major rethink on this, the Government’s plans are going nowhere.”

The industry has suffered bad press in recent months with the withdrawal of cover playing a major role in the collapse of a number of high-street names, most notably Woolworths, a move first revealed by ‘The Independent on Sunday’.

A spokesman at the Department for Business said: “Discussions with industry are continuing and there will be a further announcement on this as matters progress.”