Britain backdates trade insurance top-up scheme

LONDON, June 9 (Reuters) - Britain on Tuesday backdated its 5 billion pound ($8.05 billion) scheme to provide top-up trade credit insurance to businesses to include firms who have suffered reduced insurance cover since October last year.

The scheme, which runs until the end of this year, allows suppliers to buy government-backed insurance to either restore cover to the original level or double the amount they are able to obtain from the private sector up to 1 million pounds.

It was previously only available to companies whose cover had been reduced from April.

"This extension will give more small and medium sized businesses flexibility to respond to a reduction in their credit insurance cover," said Business Secretary Peter Mandelson.

Trade credit insurance protects suppliers against the risk of a buyer defaulting on their payment for goods and helps suppliers to offer longer payment terms to their buyers.

Banks also take such insurance into account when providing firms with working capital loans.

Mandelson said credit insurers Euler Hermes (ELER.PA), Atradius, Coface and HCC International Insurance Company, have agreed to offer the scheme to their eligible clients.

He said scheme membership has also been opened up to other unnamed credit insurance providers with whom the government is currently in talks.

"The extension of the scheme should help alleviate pressure on important supply chains and provide some confidence in securing new orders," said Steve Radley, chief economist at the Engineering Employers' Federation.