Claims and collections, part 3: debt recovery in the APAC region

Allianz Trade’s Asia-Pacific (APAC) region includes the Hong Kong Hub (Hong Kong, Taiwan and South Korea), Oceania (Australia and New Zealand), Asean (Singapore, Malaysia, Thailand and Indonesia), India, China and Japan. Debt collection here is centrally managed by each collection hub – and it works a little differently than in other regions.

This is because much of Allianz Trade’s business in these markets is fronted, meaning that we partner with licensed local organizations to issue policies. In addition, debt collection is traditionally seen as a factor in the deterioration of local relationships, which are valued highly in the Asian business environment. As a result, third-party debt collection can be met with criticism and scepticism from policyholders in the region.

As such, we take a two-pronged approach across the region, building strong relationships with both fronters and direct customers to optimize the collections process and help companies thrive.

In countries where direct collection is permitted, such as Singapore and Hong Kong, we operate directly on the ground to support clients. Take Singapore, for instance, where amicable collection is legal. We’ve found that site visits to debtors tend to be the most effective way to proceed with collections. We’re able to do this because of our vast network. Even if it’s not possible for our collection team to go themselves, the group will leverage different local Allianz Trade colleagues, including commercial teams, or an external partner. Regardless of who is conducting the visit, the goal is to work with the debtor and develop their repayment plan.

Where collections operations are more limited – as is the case in Indonesia – there are added complications. This is because we have to communicate with more parties, including brokers, fronters and clients. In other countries, like China, for example, debt collection agencies are legally restricted in the market. Amicable collection on domestic Chinese debtors is therefore managed by policyholders themselves, while our lawyers will provide assistance in case of legal collections. Our collections experts can handle export collections in China if the debtors are located outside the country. Despite this, the process remains largely the same across the region, and our expert team is on hand to advise on how best to proceed in each situation.

Given the complexity of trade in APAC, particularly on an international level, turning to a third-party in the event of non-payment seems the natural choice. However, businesses built on strong buyer-seller relationships may hesitate to jeopardize those dynamics. Part of our mission for this market is to raise awareness and understanding for the importance of collections – and why working with Allianz Trade brings benefits, not risks. In this way, we see our company as being a kind of PR representative for debt collections! It is not a scary or negative process when conducted by experts specialized in this work.

We’ve recently handled some successful cases. For example, one policyholder based in Portugal needed support with collections from a debtor based in Indonesia. Not only is the geographical distance between these countries immense, but the regulatory landscape is vastly different. If our client had handled this internally, it could have drained their resources. But thanks to our global presence and persistent efforts from our local collections experts, this large international debt was fully recovered – all without damaging their working relationship.