The European Commission has approved, under EU State aid rules, a €10 billion French guarantee scheme to support the domestic credit insurance market in the context of the coronavirus outbreak.
Trade credit insurance protects companies supplying goods and services against the risk of non-payment by their clients. Given the economic impact of the coronavirus outbreak, the risk of insurers not being willing to issue this insurance has become higher. The French scheme ensures that trade credit insurance continues to be available to all companies, avoiding the need for buyers of goods or services to pay in advance, therefore reducing their immediate liquidity needs.
The Commission found that the scheme notified by France is compatible with the principles set out in the EU Treaty and is well targeted to remedy a serious disturbance to the French economy. In particular, (i) the guaranteed insurance products are offered only to compensate for the lack of sufficient private offer, (ii) the guarantee will only be provided until the end of this year, (iii) the guaranteed insurance products can be offered by all credit insurers in France, (iv) the guarantee mechanism ensures risk sharing among its users, and (v) guarantee fee premiums provide a sufficient remuneration for the French State.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The €10 billion French guarantee scheme will make sure that domestic trade credit insurance can continue to be issued. This will protect the liquidity needs of French companies and will help them carry on their commercial activities in these difficult times. We continue working closely with Member States to ensure that national support measures can be put in place in a coordinated and effective manner, in line with EU rules.”