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Euler Hermes Economic Outlook: Top Ten Game Changers in 2014

Euler Hermes provides detailed and insightful analysis of ten global macroeconomic factors to watch in 2014.  The following are the first three game changers:

  1. China’s Transformation will be under control
  2. The U.S. will re-industrialize with or without easy money
  3. The Eurozone must keep its eye on the ball, but the ball is rolling

Read the full report here:  Economic_outlook_Dec2013Jan2014_Macro_Top_ten_game_changers_in_2014

 

Are You Claim Ready?

Being claim ready starts with three things: Coverage, Compliance, and a Complete Claims Package. Let’s delve into each one.

Coverage

One of the most critical aspects of trade credit insurance deals with having coverage on the legal entity with whom you are trading. As you know, legal entities are only responsible for their debt obligations and have their own distinct credit profile or credit worthiness. Underwriters of trade credit insurance approve coverage on a legal entity. If you, as the insured, sell to a different legal entity than the one you have coverage on, the underwriter has grounds to deny your claim.  We recommend that before you begin any trading relationship, you request information that clarifies the legal entities to which you are selling.  In some cases, there may be a holding company, parent company, or subsidiaries and it is critical you understand the legal relationships with each other. Legal entities may also us various fictitious names such as trade styles or Doing Business As (DBAs). Requesting a W9 on your trading partner often helps this process.

Compliance

Trade credit insurance policies are “contracts of adhesion” which means that the insured has to adhere to the conditions of the policy. In other words, a valid claim must be in compliance with the wording of the policy. For a claim to be paid, It is imperative to be in compliance in these key areas: paying premiums, reporting requirements, filing claims by the relevant deadlines, and providing appropriate supporting documentation. This is covered in a Complete Claims Package.

Complete Claims Package

We recommend starting a file for each of your trading partners and keeping the file current with each shipment.  What sorts of information you keep will depend on the details of your coverage, but in general, the following represent some of the items an insurance carrier will request with any notification of claim form: purchase orders, proof of delivery, invoices, and statements of account.  These seemingly commonplace documents can often be challenging to gather once a buyer goes into default. One insurance carrier, The Export-Import Bank of the United States of America (Ex-Im), places great importance on having the exporter prove, through documentation, that the buyer received the goods. Ex-Im’s position protects them and ultimately the U.S. taxpayer against seller fraud. It also helps  with the collection process since documentation is evidence that the buyer received the goods. Those currently insured with Ex-Im are strongly encouraged to review their policies. Many sellers are selling on Incoterms of Ex-Works (EXW) and bills of lading show goods being delivered to a U.S. location before being exported. In this scenario, Ex-Im will require further proof that goods were received by the buyer. Trying to ascertain this information when the buyer is financially distressed can be difficult.

Euler Hermes CAP / CAP+

On Oct 1, Euler Hermes released CAP / CAP+ product offering to help policyholders seize exceptional sales opportunities.  The basis of the program is to provide up to three months coverage on buyers who have been partially approved, or previously declined.  The attached press release includes additional details regarding product offering.  Please feel free to call us if you have any questions regarding this product.

 

CAP Launch Press Release FINAL 1.10.13

Greece Credit Insurance update

Firms Halt Insurance Over Fears on Greece

 

Two of the world’s biggest trade insurers said Wednesday they won’t offer new insurance cover for exporters shipping goods to Greece as they find it increasingly difficult to price such cover amid worries that the country may quit the euro zone.

Credit-export insurance ensures that exporters are paid if their client defaults. The loss of such cover is likely to have a major impact on the willingness of companies to trade with Greece, given the country’s deteriorating economy.

http://online.wsj.com/article/SB10001424052702303552104577436482002640836.html