Relief and joy. Those were the main emotions at Xolv when it emerged that the state guarantee had been approved. Because as we also wrote in our previous newsletter: buying on credit is the lubricant of the economy and society. It helps our customers deliver under cover, keeping financing on debtors. Credit insurers play a role in this, as Finance Minister Hans Vijlbrief said last month, 'an indispensable role'. 'Without them, the economy comes to a screeching halt,' he added.
The five main lines of intervention
The same credit insurers had already made an advance on the announced support measure recently, but now it can be used definitively and officially. The exact details will soon be revealed in a parliamentary letter from the finance ministry, but broadly speaking, the aid measure consists of the following components:
- Credit insurers have pledged to the Netherlands that they will maintain their current level of protection despite the economic difficulties faced by companies due to the coronavirus outbreak.
- The guarantee is limited to cover trade credit arising until the end of this year.
- The scheme is open to all credit insurers in the Netherlands.
- The guarantee mechanism ensures risk sharing between insurers and the Dutch state, up to €1 billion, and provides an additional safety net that can cover up to €12 billion if necessary.
- The guarantee premium is a sufficient remuneration for the Dutch state.
Aid measure for the whole of 2020
The Dutch state will thus act as a reinsurer for outstanding supplier credits. It will do so for 12 billion of the 110 billion euros of credit limits currently outstanding in total in the Dutch market. The government guarantee applies retroactively from 1 January 2020 until the end of 2020. Through the Dutch scheme, credit insurers operating in the Dutch market ensure that credit insurance remains available to all businesses. Buyers of goods or services therefore do not have to pay in advance.
'Very important intermediate step'
A good thing, although we think it is Pity that the collection period, which had been extended by 30 days, is now set back to its old level. In our view, it would have been a nice gesture if this widening had remained (for now). The insurers, incidentally, have already informed us that this aid measure does not give a carte blanche to insure all risks. Risks that were bad before the corona crisis do not suddenly qualify for credit insurance now. This keeps the market well protected.
Want to spar with us about this state guarantee? We are of course ready to tell you more on this aid measure in relation to your situation.
