As business gradually picks up in France, Bercy continues to adjust its arsenal of economic support measures. In particular, the government is considering changes to the public reinsurance system for credit insurance risks.
French government concerned about deteriorating credit insurance cover
Credit insurers cover companies against the risk of non-payment by their customers in the event of default. They provide financial guarantees for SMEs, ETIs and large companies, help them structure their organization and facilitate access to financing. In France, this tool covers around 300 billion out of a total of 700 billion receivables.
In this period of health crisis, it is proving more difficult for companies to obtain all the services they expect from their credit insurer. Bercy is also concerned about the reduction in the protection afforded to companies against the rise in payment defaults. The Ministry recently asked credit insurers to provide data to measure the extent of the decline in coverage.
Additional warranties
Aware of the problem, last March the government deployed a 10 billion euro parachute for credit insurance, to avoid leaving companies destitute in the face of non-payment. Since April 15, insurers have been able to market CAP and CAP + products for the domestic market, reinsured by Caisse Centrale de Réassurance. CAP offers a complementary domestic credit insurance guarantee, in addition to the insurer's traditional guarantee. CAP + covers risks considered uninsurable in the current economic climate. There's also CapFranceExport, dedicated to exports and reinsured by Bpifrance.
This mechanism is inspired by the public reinsurance scheme set up in 2009 in the wake of the financial crisis, but it is temporary until the end of the year.
Credit mediation moderates
"For the time being, I have relatively few cases involving credit insurance," explains Frédéric Visnovsky, who has initiated bilateral discussions with the main credit insurers to gain a better understanding of the situation.
The sector's heavyweights claim to be playing their part to the full. " Between the pre-crisis period and the beginning of May, our total cover commitments fell by 3%, and we are not making any guarantee reductions based on sectoral criteria," Éric Lenoir, Chairman of the Executive Committee of Euler Hermes France, told Les Echos newspaper. Its competitor, Coface, also estimates that recourse to the public scheme will increase in the coming months.
Credit insurers are not the only ones calling for an adjustment to the system. A group of members of parliament from the majority recently took up the issue. It is essential that the players involved take an in-depth look at the issue, in order to amplify the efforts made and open up a genuine debate on the role of credit insurers.