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Credit insurance: "Cap Relais" scheme extended by 6 months

Published December 15, 2020 - 2 mins reading time
Bank watch
On Monday December 14, 2020, the French Ministry of the Economy and Finance reached an agreement with credit insurers that will allow them to benefit from public reinsurance until June 30, 2021. This arrangement, set up in the summer of 2020 and dubbed "Cap Relais", was due to expire at the end of 2020.

Several public support schemes for credit insurance

Credit insurance, which protects companies against the risk of payment default by their customers, plays an essential economic role. With the onset of the health crisis and the increase in risk, many credit insurers had begun to reduce their cover.

To enable companies to retain their protection, while reassuring credit insurers, the government introduced several support measures in April, through the CAP, CAP+, CAP Francexport and CAP Francexport+ products, backed by a government guarantee and public reinsurance via Caisse Centrale de Réassurance (CCR).

In June, the French government added to its arsenal by setting up Cap Relais, a public reinsurance scheme specially designed for SMEs and ETIs. Initially due to expire on December 31, 2020, this scheme allows the State to assume up to 75% of claims, in exchange for a commitment by credit insurers to maintain their cover and pay a reinsurance premium to the State.

Renewal of the Cap Relais scheme for 6 months

On Monday December 14, 2020, an agreement was reached to extend this scheme, subject to authorization by the European Commission, until June 30, 2021.

This decision was the subject of discussions between Bruno Le Maire, Minister of the Economy and Finance, Franck Riester, Minister for Foreign Trade and Attractiveness, Alain Griset, Minister for SMEs, and the main credit insurers in France, namely Groupama Assurance-crédit & Caution, Axa Assurcrédit, Coface and Euler Hermes.

From now on, credit insurers will have to cover 80% of claims, compared with only 25% up to now. This reassessment of risk-sharing makes the system less costly for credit insurers, whose percentage of the premium to be paid to the State is also reduced.

"The extension of the Cap Relais program is good news, adding to the range of support measures put in place by the French government to help our VSEs and SMEs cope with the crisis, particularly those with subcontracting activities. This scheme will enable companies to pursue business-to-business exchanges with greater peace of mind in 2021," declared Alain Griset.