Excess of Loss Insurance
Excess of Loss Insurance (XoL) is designed to protect your organisation from catastrophic or unusually large losses.
What is Excess of Loss Insurance?
Excess of Loss Insurance, also referred to as XoL, is a specialised form of Trade Credit Insurance designed to safeguard businesses against catastrophic or extraordinary financial losses arising from customer insolvency or default.
These losses may be beyond the scope of a standard Trade Credit Insurance policy and typically would have a significant financial impact on your business and corresponding balance sheet.
Excess of Loss Insurance is designed to provide additional protection against such extreme scenarios, ensuring that your business can recover from unexpected and severe financial losses.
Key Features:
- Good for insuring a portfolio of your larger buyers
- An Excess of Loss structure incorporating an increased level of risk share with the insurer
- Insurers will typically underwrite your credit control procedures, allowing you to set your own credit limits up to a pre-agreed level
- Enjoy peace of mind that your business is protected from a catastrophic loss
Benefits of Excess of Loss Insurance
Protect your business from significant, unexpected losses.
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1. Higher Value Credit Limits
Excess of Loss insurance allows you to obtain insurance coverage for larger losses or liabilities that may exceed the credit limits provided by standard insurance policies. Insurers normally incorporate an increased risk share in the form of a large Policy Excess, which allows insurers to agree credit limits of significant value. In addition, the credit limits are normally issued on a non-cancellable basis to the end of the policy period. This gives you added financial security and peace of mind as you are protected against the impact of a significant loss.
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2. Credit Control
The Insurer underwrites the credit control procedures of the policyholder therefore enabling businesses to set their own credit limits at an agreed level above that normally offered by a standard credit insurance policy.
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3. Expertise and Resources
Insurers offering Excess of Loss insurance have access to the expertise and resources of the reinsurer. This translates into better risk assessment, underwriting, and claims handling practices, ultimately benefiting you as a client.
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4. Regulatory Compliance and Financial Stability of the Insurer
With Excess of Loss Insurance, your insurer is required to maintain its own financial stability, solvency and must comply with regulatory requirements. By meeting capital and solvency regulations, insurers are better positioned to honour their obligations to you as a policyholder and maintain stability in the marketplace, ensuring that your coverage remains reliable.