Key learnings from the Covid crisis fuel innovation and growth

For Euler Hermes, 2020 was a marathon punctuated by demanding sprints. Waves of Covid related lockdowns resulted in swings in demand from our customers, and we responded by accelerating our thinking around innovation and experimenting with new models for our digital product offer. In doing so, we were able to reinforce our value proposition for SMEs, a priority customer group.

So, while 2020 was difficult, it also presented numerous opportunities that we are using to help us thrive in 2021. These are four of our key learnings from a challenging year.

When customer needs change as often and quickly as they did during the pandemic, listening to them and understanding their expectations becomes more important than ever.

We saw this with our “insurance as a service” APIs, a flexible solution that allows small and new players to get protected against non-payments without taking the entire obligor credit risk onto their own books. The product offers the advantage of allowing customers to access their cash earlier when combined with invoice financing and offers buyers expanded payment terms; in the crisis period, this helped customers manage cash flow with Euler Hermes acting as payment recovery teams on their behalf.   

Our teams also innovated by transforming the single insurance services into an API to handle a set of invoices, allowing customers in e-commerce to connect to enterprise resource planning and cash flow management systems in order to create not just single invoices but groups of invoices to be insured.

As a result of adjustments made during 2020, the claims loss ratio was divided by a factor greater than four and single invoice insurance experienced a profitable growth of +3%.  

To take customer centricity to the next level, we have to offer insurance with a simple value proposition.

The single insurance API is already a simple process but requires the customer to stop and think at each transaction. By presenting an invoice envelope we make the process even easier for them. A subscription model – which we are currently exploring – takes this one step further by removing all obstacles as instead of opting in to each transaction, the customer has to opt out.

We want to evolve our traditional model of offering API products through partners, like the start-up Fundbox and traditional players like Credit Agricole Leasing Factoring and BPCE Factor.

Interacting directly with our customers streamlines processes and enables us to access – and learn from  their data.

The importance of data, both to Euler Hermes and our customers, was also demonstrated clearly by the performance of our TradeScore product, which allows customers to upload their financial statements so that we can calculate their grading and establish healthy business relaltionships with trade partners. This has been particularly important during COVID, where the risk of default is high and services pointing at that risk, like TrafficLight, have been critical within Tradescore. Last year, we grew this product across five different countries, including the United States.

Startups value metrics that larger companies have traditionally undervalued. One is overall user numbers: startups frequently offer services on a freemium model to attract new customers and develop their loyalty.

We trialed this model for a few months during the COVID crisis, offering the TrafficLight service free of charge within Tradescore. It enjoyed all-time best launch phase in Tradescore history with more than 400 new companies joining in the first 45 days, and the majority of customers continued with the service after the free test period. This allowed us to continue testing with the engaged customers and understanding what type of new services they would be ready to pay for in the future iterations of our products.  

Our focus on customers and data throughout 2020 has clearly paid off, and has led to several exciting product developments for 2021.
This year we will continue to grow our core market and scale up emerging businesses that we have seen hold potential, all the while building new viable options to keep Euler Hermes at the forefront of innovation. Our focus will be on adapting and strengthening our digital solutions while developing a new on-demand digital insurance product and an ecosystem of data services to serve the dynamic SME market. Following a challenging year, we’re well placed for the future.