QBE Trade Credit through QBE the Americas now provides business with protection against bad debt losses due to insolvency, political risks, or the extended inability of their customers to meet their trade credit obligations (Protracted Default).

The opening of QBE the Americas Trade Credit division expands QBE Trade Credit’s Global network, that will not be able to truly offer global solutions to its clients’ trade credit risk, with the underwriting and management of policies being accomplished ‘locally’. QBE’s clients can draw upon QBE’s resourced including an extensive corprates database, developed through forty years of underwriting experience.

‘The Americas’ Trade Credit division in New York expands the number of QBE Trade Credit offices around the globe, where there are not underwriting operations in New York, London, Paris, Auckland, Singapore, Hong Kong, a trade credit affiliate in Japan (Meiji General), and a collaboration with ICICI Lombard in India. With subsidiaries in Argentina, Brazil and Colombia, QBE the Americas offers QBE Trade Credit potential for further expansion of its global network, although no plans have yet been formalized.

Credit Insurance

QBE’s credit insurance policy preserves and enhances our clients’ credit management procedures, while at the same time protecting against the perils and effects of a significant bad debt loss.

Benefits of QBE’s Trade Credit Policy:

1. Preserves our Insureds’ profitability and allows them to grow sales, and confidently develop new markets.
2. Protects our Insureds’ balance sheet and cash flow.
3. Enhances our Insureds’ borrowing capabilities.
1. The Excess of Loss Policy

The Excess of Loss Policy targets medium to large US corporations, ideally with sales in excess of $50,000,000, who are willing to accept the concept of a risk partnering relationship with QBE. In return, QBE will work with its clients and their credit management procedures to tailor a policy and structure of coverage that meets their unique requirements.

The Excess of Loss policy is offered in both Non-Cancelable and Cancelable format. The Non-Cancelable Form provides our customers with the additional comfort that Endorsed Credit Limits will not be cancelled, allowing our customers to expand sales with confidence and the full support of their credit insurance partner - QBE.

The policy is designed to protect our customers against a relatively high level of bad debt losses, while also providing a significant amount of flexibility (”Discretionary Limit Authority”) to make day-to-day decisions, and allow the Credit and Risk Managers to focus on the functions of their respective departments.

The Excess of Loss Policy can cover both Commercial and Political Risks, for Domestic and Export Sales. Premiums reflect this risk-sharing structure compared to the more traditional credit insurance alternatives.

The Excess of Loss Policy is targeted at Corporations with strong credit management controls, who are looking to complement their own in-house skills and competencies, working with and partnering with their Credit Insurer.

Companies seeking a policy structure designed to protect them against the effects of a significant bad debt loss, but also provide them with a greater degree of flexibility and decision-making ability than other traditional credit insurance policies.

Companies seeking a policy with less administration than the more traditional credit insurance policies, allowing the Credit and Risk Managers to focus their attention on the day-to-day functions and decision processes of their respective departments.

Excess of Loss - Underwriting Criteria

The identification of a strong partner willing to share, rather than ‘off load’, the risk is a key feature of the Excess of Loss Policy. The risk sharing is in the form of an agreed upon first layer of self insurance based on a customer’s industry, diversification of its account receivables, country risk (for those exporting), and historic bad losses suffered by the customer.

Strong Credit Management Procedures are paramount to this product. QBE, as part of the initial underwriting process requires an Applicant to complete a Credit Management Questionnaire. It is important that QBE reviews an Applicant’s Credit Management Procedures and, unlike some of the more traditional underwriting methods, prior to binding any coverage, QBE will insist on meeting the Customer to carry out an on-site credit control inspection.

QBE believes strongly in building relationships with its clients. We are a relationship driven Insurer caring as much about ‘who’ we are insuring, as about ‘what’ and ‘where’ we are insuring. The on-site credit inspection allows QBE to meet the people it will be working with, prior to binding a policy, and to answer personally any questions a potential client may have about the policy, the scope of coverage, or about QBE itself.

Excess of Loss - Policy Details

The Policy provides for a layer of cover - The ‘Policy Amount’, sometimes referred to as the Maximum Liability. If an Insured’s losses exceed the Aggregate Deductible, we will pay the Insured Percentage amount (typically 90%), in excess of the Aggregate Deductible, until the Policy Amount is reached.

The client’s credit control procedures are agreed upon by QBE, prior to the binding of any coverage. Our Insured will receive a formal letter from QBE approving their credit management procedures, and endorsing them to the Policy at its inception.

A significant amount of flexibility is granted to our Insureds / Customers in the form of a “Discretionary Credit Limit” (DCL), subject to the Insured adhering to the “Approved Credit Management Procedures”. The DCL removes the need for our Insureds to constantly seek QBE approval of a Credit Limit, instead only requesting coverage for those limits in excess of the DCL. All Credit Limits in excess of the DCL require QBE’s approval and are endorsed specifically to the policy through an Endorsed Credit Limit.

To further alleviate any administrative burden, QBE’s customers, unlike other traditional credit insurance alternatives, will not need to declare their sales during the policy period. Our clients will, however, need to report all “Notifiable Events” to us, which will include events such as insolvencies, accounts where the Insured is aware of payment difficulties, and overdue accounts for pre-agreed amounts beyond a certain number of days past due. All parameters are agreed upon in advance of binding any policy.
2. The Key Account Policy

As the name implies, this type of policy is designed to protect a number of “Key Accounts” of an Insured. Typically, we are asked to review five or ten buyer risks under this type of policy, but can under special circumstances consider up to twenty buyers.

The policy is intended for companies seeking a policy structure designed to protect a number of high / key credit exposures. Typically, these are the customer’s largest exposures, but coverage can be sought and obtained on key international risks, where perhaps the Insured’s experience is limited, or where they represent a major increased export sale.

While the up front underwriting is paramount to QBE accepting Key Account risks, it remains important to QBE’s underwriting philosophy and approach that its Insured maintain strong credit management controls. As with the Excess of Loss policy, we are targeting medium to large corporations with at least $50,000,000 in sales.

Underwriting Criteria

All Risks are assessed in advance of binding any coverage. Information required by the Underwriters will include, but not be limited to:

Underwriters will review the latest financial information for the various Buyers and details of the Applicant’s past trading experience with the various Buyers. Where necessary, additional information and clarification may be requested.

Strong Credit Management Procedures are part of the underwriting process. While they may not be as paramount to the policy type as with the Excess of Loss Policy, it is important that QBE reviews an Applicant’s Credit Management Procedures.

Policy Details

Coverage is typically provided on a ‘ground-up’ basis, with an Insured Percentage not exceeding 90% applying to those Buyers endorsed to the Policy, although this may vary depending on QBE’s appetite for the risk.

A policy amount will be assessed on the level of coverage requested, as well as the Insured’s requirements and possible financing needs.
3. The Specific Account Policy

As the name implies, this type of policy is designed to protect a specific Buyer risk.

QBE will consider covering a customer’s largest credit risk, with an exposure greater than $5,000,000 where a Key Account or Excess of Loss policy has been deemed inappropriate.

Typically, coverage will be offered on a ‘ground-up’ basis, with an Insured Percentage typically between 80% and 90%, although this may vary depending on QBE’s appetite for the risk.

Underwriting Criteria

As with ALL Buyer risks, QBE undertakes a rigorous and in-depth credit assessment of the buyer risk. Buyers who fall below our risk-rating threshold will not be covered. Buyers with less than two years of operating results and/or two years of trading history with the Applicant, fall outside the Underwriting Criteria and will not be considered.

In the majority of instances, without any special circumstances, coverage will be on an Insolvency Only basis.

From QBE AMERICA WEB SITE

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