Initiated and led by Euler Hermes, the joint agreement between credit insurers and the federal government will protect supply chains and trading in a way that allows businesses to operate with confidence and plan for future recovery. 

The economic shield (also known as “Schutzschirm”) protects previously healthy businesses against the negative effects of Covid-19, such as a slump in sales or the need for loans. Through the shield, credit insurance cover can be maintained despite the increased risk of defaults, with the government providing a counter-guarantee for indemnification payments up to 30 billion euros to commercially insured companies.

Credit insurers will continue to cover more than 400 billion euros, almost half of which is made up by Euler Hermes. The insurers will cede almost 60 percent of their premium income to the federal government and bear proportionate losses of up to 3 billion euros, as well as accepting default risks that exceed the guarantee.

“This agreement is an important signal during these volatile times. When we saw the magnitude of the pandemic, we knew we had to act, so we have been fighting to ensure our clients can continue business as normal as possible, despite significantly increased risks,” says Ron van het Hof, CEO of Euler Hermes for Germany, Austria, and Switzerland. 

By shaping the protective shield agreement, Euler Hermes continues to make a significant contribution to the economy, while laying foundations for its stabilization and recovery. 

“These measures will give companies time to prepare for the new normality, to adapt their business models to the current situation and ultimately put many companies back on the road to success by the end of June," says Van het Hof.

The agreement will see the protective shield extended until June 30, 2021, subject to the expected final approval by the EU Commission. The extension should further stabilize German businesses and provide them with the foundation to build a stronger future.