XoL is less well known than the traditional trade credit insurance solutions, which Euler Hermes has been offering for nearly 130 years.
If a buyer does not pay or pays very late, the trade credit insurance policy will pay out a percentage of the outstanding debt.
“The value we see in that for our clients is that we’re helping them manage their credit, and we’re helping them identify trade and grow their business with new customers around the world,” said Musters.
So, it’s very much a service we provide to our clients, where we’re helping them grow their business and helping them trade safely around the world.
“At Euler Hermes, we have a database of 80 million companies around the world that we actively monitor, but that’s not really of interest to our XoL customers because they know their business and they’re happy managing the risks themselves,” Musters told Insurance Business.
“What our XoL customers want is the comfort to know they’re not going to suffer any large, unexpected losses.
Essentially, through strong internal credit risk management, XoL customers carry out the traditional trade credit services themselves, and they only want the insurance for when something goes drastically wrong and the losses exceed their expectations.
We estimate that in the US credit insurance market, there are about 20,000 companies insured across all the insurance carriers, and yet, we estimate there are 20 million companies who could be buying credit insurance.
“That’s one of the reasons why we’re looking at developing XoL, because we have a lot of large uninsured US and Canadian companies who already have these developed credit teams and credit processes that could support an XoL product.