1. XoL customers are subject to Credit Management Review
Before a customer can take out an XoL policy, Allianz Trade’s in-house XoL Underwriters assess and verify their credit management. XoL is a policy tailored for companies with mature credit risk management – often with a team of credit managers in-house. As such, we need to ensure their processes are robust at policy inception, before offering binding terms.
2. Policies are (almost) set in stone
In contrast to TCI, XoL limits cannot be cancelled or reduced during the 12-month insurance period. This offers a lot of certainty to customers. New buyers can of course be added during the life of the policy, and the new limits will be non-cancellable for the remainder of the policy duration.
3. Customers gain flexibility
XoL policies also offer a high discretionary credit limit (DCL) – the amount of exposure a company can take without consulting us. It’s a light-touch policy that gives our customers autonomy, flexibility and greater protection when needed. We’re very careful when offering these policies: we need to ensure that the customer manages risk adequately.
4. Customers share the risk
There is a high level of risk share between the customer and insurer with these policies because of the non-cancellable limits and high DCL. Typically, the Aggregate First Loss is set at a higher level than traditional TCI policies.
5. XoL is cost-effective and stable
Thanks to this risk share, XoL premium rates are usually lower than for traditional TCI. Furthermore, raising rates at renewal is not common, even if a customer has made a claim. These are exceptional losses, and the reason we’re there.
If necessary, we may choose to increase a customer’s first loss if we realize it has been set too low. However, we aim to find a fair balance, and our customers – who renew year on year – recognize that.