Trade credit insurance specialist Euler Hermes is working with the NZ Government to prop up the local trade credit market following a surge in unacceptable risk.

Under a new public-private scheme, exporters can access an excess layer of credit cover underwritten by the NZ Export Credit Office.

Trade credit insurers have imposed tight restrictions worldwide following a surge in claims amid the economic downturn.

The NZ excess cover deal is intended to replace primary cover partially withdrawn by Euler Hermes or provide a top-up layer of cover where the insurer has only partially approved the buyer limit requested by the exporter.

Allianz-owned Euler Hermes is the first private trade credit insurer to negotiate the public-private arrangement.

The move follows a NZ Government commitment to extend the export credit office’s mandate to support private sector provision of short-term trade credit assistance.

The export credit office already operates a short-term trade credit guarantee providing cover on “creditworthy” buyers direct to exporter where private cover is unavailable.