What is Excess of Loss insurance?

XoL is a kind of trade credit insurance (TCI). While TCI helps businesses by insuring day-to-day losses, such as unpaid invoices, an XoL policy provides coverage beyond that of traditional TCI, providing security against large, unexpected losses.

XoL is designed for organizations that are adept in credit management, typically with their own in-house team of credit managers. Thus, businesses are able to have as much or as little participation as they wish in creating policies and making underwriting decisions. In cases where companies wish to take on the bulk of these responsibilities, insurers assume more hands-off, supportive roles.

XoL policies typically have high discretionary credit limits, and are non-cancellable for 12 months. Knowing that their credit limits will remain consistent for this fixed period gives organizations an added sense of security, especially for multinational companies operating within different geopolitical climates.

Because XoL is flexible in how it can be structured, it’s the responsibility of the insurer to adapt policies according to the individual needs of companies.

Although XoL is an established product in the US and Europe, it has a younger presence in APAC, where the XoL market is less developed. However, local businesses are quickly catching onto the advantages of XoL for mitigating credit risk, spurring its spread across the region.

An adaptable solution for a diverse business landscape

Allianz Trade’s first major XoL policy in APAC materialized in 2020, when a Singapore-based company approached us for support on a deal. The success of this partnership led us to identify real potential in the APAC market. In 2022, we launched our XoL business line in the region out of Singapore, to be able to offer a localized service.

APAC is an incredibly diverse market consisting of a wide range of countries and industries. Every single country is very different, from the way they carry out business to preferences for personal conduct.

The adaptability of XoL is highly compatible with this mixed landscape: its bespoke nature enables insurers to be truly agnostic in terms of where they can offer policies and the product being insured. The sectors where XoL can be applied are equally manifold, ranging from agriculture to IT.

So far, Allianz Trade has issued XoL policies in China, Japan, Malaysia, Hong Kong, Singapore and Australia, and we’re rapidly expanding our offer to other countries in APAC.

Pooling our strengths for success

Companies that operate in multiple markets face unique risks. For organizations with considerable credit management expertise, an XoL policy allows them to make their own underwriting decisions based on the superb local knowledge they possess, combined with the support of their carrier.

In fact, having an XoL policy in place can be a valuable lever for growth. One of our clients in APAC reported that they succeeded in using their XoL policy to increase annual turnover by 40%.

One of the unique benefits of partnering with Allianz Trade is our extensive international reach. With presence in many countries around the globe, we’re able to draw on the expertise of analysts worldwide and provide this information to our XoL customers. In APAC and beyond, we’re proud of our team’s diverse backgrounds – because incorporating different perspectives leads to consistent innovation.

These resources and global view equip us with a deep capacity for agility, which we leverage to address the specific needs of different companies. Our radical customer centricity serves as our guiding light in helping our XoL clients to grow with confidence.