U.S. trade credit insurers have approached the U.S. Treasury Department and Federal Reserve seeking financial backing for claims payments to support business supply chains hit by the novel coronavirus pandemic, three people familiar with the matter said.
Trade credit insurance, which covers $600 billion in U.S. business transactions annually, protects businesses selling goods and services from the risk that insolvent buyers will not pay them. Washington lobbyist David Ross spoke with Steven Seitz, director of the Treasury’s Federal Insurance Office on a May 27 call about support for the niche industry, James Daly, chief executive officer of Euler Hermes Americas, an Allianz SE unit, told Reuters.
Trade credit insurers want about $60 billion in government support, as shared claims payouts, Daly said. Policyholders would pay additional premiums for the backing.
Ross, a lawyer with WilmerHale, also had a May 26 call with the Fed about support, Daly said.
Two additional sources confirmed the meetings.
Ross did not respond to requests for comment.
Trade credit insurers are the latest industry to seek federal backing for losses related to pandemic lockdowns that have sparked mass unemployment and bankruptcies.
Small and mid-sized businesses comprise 60% of U.S. customers for the industry, which also has sought government backing from other nations. The insurers hope to avoid rate hikes and trimming coverage as rising bankruptcies make non-payment risks dicier to insure.
U.S. insurers have reduced coverage they offer by 10% to 15%, figures that could reach 20% to 25% percent, Daly said. Rates have increased on average by 10%.
“We’re not looking for a bailout,” Daly said. “What’s good for the economy is to maintain the coverage in the supply chain, just like banks need help to continue lending.”
France, Germany, the Netherlands and Britain are among the countries backing trade credit insurers.
(Reporting by Suzanne Barlyn in Washington Crossing, Pennsylvania Additional reporting by Pete Schroder in Washington Editing by Michelle Price, Lauren Tara LaCapra and David Gregorio)
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