Credit insurance: for safe and sustainable business

Euler Hermes, a company of Allianz, has been protecting and supporting businesses for more than 100 years. Its trade credit insurance helps thousands of companies to trade with confidence, safe in the knowledge that they are protected against non-payment for goods or services. In an interview with allianz.com, Chairman of the Board of Management Wilfried Verstraete, explains how it all works.

 

What exactly is credit insurance? Why is that important?

 

In the simplest terms, credit insurance is insurance used by businesses to ensure that they receive funds owed to them. Businesses selling their products and services to “buyers” take a risk that the buyer might not pay – and we reduce that risk. Buyers can become insolvent or fail to pay within the agreed terms and conditions. If a buyer cannot or will not pay, our clients are insured and indemnified up to the limit of the policy.

 

Our extensive knowledge about buyers, trade sectors and economic trends helps our customers choose the strongest partners to trade with. This is important, because it allows companies to expand or invest in their businesses sustainably rather than stockpiling cash to cover their accounts receivables. The bottom line is that trade credit insurance helps to power the global economy, because it provides certainty.

 

 

How does this benefit your customers?

 

For over 100 years, we have been helping businesses do business. Today, we are the global market leader in trade credit insurance, with 1,500 risk experts in more than 50 countries. In fact, we track and analyze daily changes in corporate solvency among small, medium and multinational companies active in markets representing 92 percent of the global GDP. All of this knowledge and expertise is made available to our customers 24/7.

 

Our business model puts us close to local economies and buyers. We have risk offices in key markets, regions and countries. We also have economic research specialists who constantly analyze global and economic trends to offer our customers insights and tools. All of this knowhow is used by our customers – from start-up entrepreneurs to blue chip multinationals – to make informed decisions about the level of credit they should offer their customers, identify those buyers at risk and manage their credit risk exposure accordingly, and avoid financially weak or unstable buyers and even countries.

 

 

Is that the only service you offer?

 

To safeguard our client’s business growth we also offer several services that complement credit insurance. These include bonding which protects against contractor failure and is a flexible alternative to bonding available from banks. It is particularly used in industries with large projects and contracts, such as construction, energy, infrastructure, oil and gas.

 

Another service we offer is called “excess of loss” (XoL). It’s for large and multinational companies seeking protection from exceptionally large trade credit losses to their balance sheet. We also offer transactional cover which is primarily multi-year credit insurance cover for a single risk or single transaction which also includes in certain cases political risk insurance.

 

And then there is debt collection, where we recover bad debts and overdue invoices – regardless of size, sector or geography – through our global network of collectors.

 

 

Can small companies also benefit from your services and knowledge?

 

Credit insurance is not only designed for large businesses but also for start-ups, entrepreneurs and micro/small and medium enterprises (SMEs). Smaller businesses often have resource constraints and specific needs such as clear, practical and easy-to-use solutions.

 

We’ve designed packages that specifically address these needs. Easy-to-understand, set up and administer, and often online, they provide both protection and the benefits of our global network of risk expertise. In this way, credit insurance is not too costly or difficult for them to manage… particularly as self-insurance (i.e., no insurance and paying the defaults from the company cash flow) is rarely a better alternative.

Wilfried Verstraete, allianz.com, Chairman of the Board of Management: "For over 100 years we have been helping businesses do business. Today, we are the global market leader in trade credit insurance, with 1,500 risk experts in more than 50 countries."
Wilfried Verstraete, allianz.com, Chairman of the Board of Management: "For over 100 years we have been helping businesses do business. Today, we are the global market leader in trade credit insurance, with 1,500 risk experts in more than 50 countries."

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

 

Remi Calvet
Euler Hermes
Phone +33.1.8411-6141
Send email

Antje Stephan
Euler Hermes
Phone +49.40.8834-1033
Send email

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