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Protection against unpaid invoices

Protection against large unpaid invoices

Industry:

Petrochemicals

Challenge:

Customer bad debts

Policy Benefit:

Protection against catastrophic loss

Challenge

Although “Policyholder A” have completed several successful transactions since the past 2 years with “Buyer B”, they are not immune to the unexpected.

Allianz Trade in Middle East provided “Policyholder A” a 1,000,000 USD Credit limit to protect their loss from a non-payment by “Buyer B”. Suddenly “Buyer B” faced cash-flow issues following the sharp price decreased of the raw materials provided by “Policyholder A”.

“Buyer B” was unable to pay “Policyholder A” and claimed for a discount to compensate the price volatility of the raw materials. “Policyholder A” refused to grant the discount as the contractual terms were clearly agreed between both parties. 

Without a trade credit insurance, “Policyholder A” would have suffered 1,000,000 USD loss including 15% VAT.

Solution

“Policyholder A” will receive a Claim Payment of 800,000 USD after VAT and self-retention. And, our services do not stop here!

To help “Policyholder A” reduce their loss from the un-insured part, Allianz Trade team brought their depth of expertise to proactively guide two possible mitigation proposals 2 weeks after a claim submission:

  • A negotiated repayment plan agreed with “Buyer B”, or
  • Commencing a legal action in court.

Results

“Policyholder A” is satisfied with the speed of service. Within 2 weeks of turnaround time, our Claim & Collection team have confirmed our payment commitment with additional support to further mitigate their loss. 
 
The situation proved “Policyholder A” the benefit of a partnership with Allianz Trade with a trade credit insurance as part of their business, which provide a protection against significant loss. 
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