EC Authorizes Reinsurance Scheme to Support French Credit Insurance
Under the EU state aid rules, EC has authorized a French short-term credit reinsurance scheme to support the credit insurance market in the context of the COVID-19 epidemic. Credit insurance protects businesses providing goods and services against the risk of non-payment from their customers.
Given the economic impact of the COVID-19 epidemic, the likelihood of credit insurers refusing to cover a risk has become higher. The French reinsurance regime, which complements the other measures implemented by France in the field of credit insurance, ensures that credit insurance remains available to all businesses, preventing buyers of goods or services from paying for their purchases in advance, thus reducing their immediate liquidity needs. The estimated maximum budget of EUR 2 billion, for the measure, comes from a reallocation of the budget of EUR 10 billion planned for a previous French credit insurance measure approved by EC on April 12, 2020.
EC assessed the measure in the light of EU state aid rules, and in particular Article 107 (3) (b) of the Treaty on the Functioning of the European Union (TFEU), which allows EC to authorize State aid measures put in place by member states to remedy a serious disturbance in their economy. The Commission considered that the scheme notified by France was necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in accordance with Article 107 (3) (b) TFEU and the general principles set out in the temporary framework adopted by EC. On this basis, EC cleared the measure under EU state aid rules.
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Keywords: Europe, EU, France, Insurance, Reinsurance, Short-Term Credit, Credit Risk, COVID-19, EC
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