Excess of Loss: embracing customized protection

Excess of Loss (XoL) insurance is a bit like tailor-made clothing. Mass-produced standards don’t always accommodate the individual and, if given the choice, wouldn’t we all prefer a perfect fit, every time?

That’s the benefit of XoL with Allianz Trade: we adapt the policy to our clients’ needs and existing credit procedures, not the other way around. And clients the world over are embracing this custom solution. 

XoL policies are designed for businesses with mature in-house credit management to cover exceptional losses.

Allianz Trade has supported businesses in the UK and US with XoL policies for over a decade. We’ve since expanded our offer into several markets in Europe and, most recently, the Asia-Pacific region (APAC). This growth came about organically – the demand for certain but flexible, cost-effective coverage is there, and we are ready to meet that need with our XoL product.

The markets benefitting from this offer vary hugely in terms of XoL familiarity and maturity.

Germany, for example, is a very interesting case. There are very few XoL actors in Germany, largely because the filing requirements for financial statements are comparatively low. As a result, it’s challenging for companies to obtain the necessary information to develop robust internal credit management. Companies in Germany – such as its network of large multinational manufacturers – therefore benefit both from Allianz Trade’s XoL insurance and our extensive database of buyer information. It’s a win-win scenario that only we offer.   

At the other end of the spectrum, you have APAC. Trade credit insurance (TCI) doesn’t have the same historic foothold here as Europe and North America, even less so XoL. In new markets like this, we sometimes see resistance to XoL due to the large risk share element. Being risk-averse is a great position to take in any business practice, but for companies that currently have no insurance at all, the math doesn’t add up.

Part of the effort to expand Allianz Trade's Excess of Loss offer into new markets is focused on changing mindsets. We want to emphasize that assuming responsibility for an aggregate first loss is far less hazardous than taking it all on alone. Ultimately, these policies offer huge benefits. Companies can enjoy high levels of trust and autonomy, avoid claims that could significantly affect their balance sheet and are empowered to make their own credit decisions. All with the knowledge that they have coverage if they need it. 

What makes XoL such an effective product is its versatility to meet businesses where they’re at – it’s truly adaptable. Clients can even mix and match their policy. Say, for example, a multinational business has a strong credit management function in Europe but not in APAC. Well, they can have XoL in Europe and traditional TCI in APAC!

At Allianz Trade, we are constantly learning and integrating best practices into our work. Being part of a larger organization that provides other products, we are able to act like a true XoL underwriter – we give our clients the confidence that they will be covered without interference. The results speak for themselves, with clients renewing their policies year-on-year.