GVNW cautiously accepts non-extension of protective shield

The German risk and insurance management association, the GVNW, has cautiously welcomed the announcement by the German insurance association (GDV) that it is happy that no further extension of the federal government’s support for the credit insurance industry is needed after 30 June. GVNW supported the introduction of the protective umbrella scheme when it was introduced last year to help German businesses struggle through the Covid-19 crisis, as commercial credit insurers made it clear that they could not provide cover without government backing. The state-backed scheme was introduced in Germany, as in most other European countries, in cooperation with the leading credit insurers, to prevent an economic crisis caused by the serious cashflow crunch that inevitably accompanied the lockdowns introduced to help cope with the pandemic. The German scheme was supposed to come to an end at the end of 2020 but was extended until the end of June, as Germany continued to struggle with the Covid-19 crisis. It was thought that the scheme would be further extended as the vaccination programme continues to falter in Germany, as across most of the rest of Europe. But this will apparently not be so and the GDV said that it is happy with this. “The protective umbrella of the federal government and the trade credit insurers to stabilise the supply chain expires as planned on 30 June 2021. The contracting parties agree that the protective screen was an important and very successful pillar to bring calm and stability to the market. A renewed extension is not necessary in view of the current market and data situation, especially since the expiry of the protective shield is flanked or cushioned by the continuation of other measures to secure liquidity by the federal government,” said the GDV in a statement. The insurance association added, however, that the situation has to be closely monitored and if the economic situation takes a significant downturn, then a rethink may be required. “The federal government and trade credit insurers will remain in a very close exchange beyond 30 June 2021, in order to be able to act quickly in the event of a significant deterioration in the economic situation and an associated risk to the supply chains within the framework of EU legal possibilities. To this end, there will be close coordination and monitoring of market developments,” said the German insurer association. “From the point of view of the federal government, the protective umbrella put in place in spring 2020 was a complete success and has helped to stabilise supply chains and the flow of goods in the amount of about €420bn. The supply chains of the German economy endangered as a result of the coronavirus pandemic were maintained,” added the GDV. The association said the macroeconomic outlook currently points to a recovery. Other state support measures, such as a relaxation of insolvency rules, will continue until the end of the year, it pointed out. “These will help to flank the recovery path of the German economy. Against this background, it is the right time for the federal government and private trade credit insurers to make insurance coverage available again on a purely market-based basis and to gradually reduce government market intervention. As established… credit insurers have a tried-and-tested concept for risk monitoring and control that focuses on prevention and close communication with their customers and their buyers. The credit insurers are aware of their economic responsibility and will continue to provide insurance cover based on a well-founded risk analysis even without a protective shield,” concluded the GDV. The GVNW was clearly pleased that the insurers feel they can cope with the next phase of the recovery from Covid-19, but also stressed the need for close monitoring of the ongoing situation. Alexander Mahnke, president of the GVNW, told Commercial Risk Europe: “From our point of view, the protective screen was an important instrument for stabilising the German economy during the pandemic. If the insurers involved and GDV are of the opinion today that a further extension of the protective shield is not necessary because its goal has now been achieved, we naturally hope that these assumptions will come true. At the same time, we trust that everyone involved will speak to each other again quickly and react accordingly if the assumption proves to be unsustainable.” To register for all the latest news and analysis on the German-speaking risk and insurance market, sign up to our new dedicated service CRE Deutsche. The next monthly German-language newsletter is published tomorrow (27 April).

GVNW cautiously accepts non-extension of protective shield

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