Holger Schaefer, Head of Region at Euler Hermes Asia Pacific, the global leader in trade credit insurance, spoke at length with Wanda Rich, Editor of Global Banking & Finance Review, on a range of subjects including challenges and opportunities brought by the COVID-19 pandemic, Euler Hermes’ future focuses as well as the organisation’s continuing dedication on customer service.
With a global market share of approximately 35%, Euler Hermes has been leading the trade credit insurance market for decades, in which time a wealth of data and information have been collected with new challenges constantly being brought to light. “2020 was obviously a challenging year and we have seen massive disruptions in global supply chains. Based on a survey we conducted late last year, 94% of companies revealed that COVID-19 has disrupted their supply chains with one in five considered the disruption severe. The importance of trade credit insurance and products are once again in the limelight,” Holger said.
Overall, he sees the trade credit insurance industry prospering strongly. “As the pandemic unfolds, it has become more important in emerging markets to support businesses. Right now in particular, it is important to help businesses to regain the confidence to trade again. Not only did China’s early recovery from Q2 2020 has provided momentum for regional trade, the Regional Comprehensive Economic Partnership (RCEP) signing late last year was also very good news for multilateralism and sent a signal of confidence to businesses across Asia Pacific. Our economic research estimated that RCEP can boost regional trade by USD90 billion per annum. We are working very closely with our customers in helping them to take full advantage of the economic upswing from 2021 and beyond.”
“Trade credit insurance is about protection and paying a claim, of course, but even more valuable is the advice that we provide, based on the data that we possess,” he explained. “We can see clearly how a sector or a particular buyer of one of our policyholders is developing from a financial point of view, because we have the ability to get information that sometimes our customers cannot. In the unfortunate event of non-payment, we provide collection services on behalf of our policyholders too which is very effective and helpful in preserving their relationships with buyers.”
Looking ahead, Holger’s predictions for the upcoming years go beyond just managing the existing COVID-19 crisis. “There are new challenges on the horizon: digitalisation, for example. Trade nowadays is being managed in a very different way so the trade credit insurance industry will have to keep up and adapt. Environmental, social and governance (ESG) issues is another focus of ours. Euler Hermes was the first credit insurer to have incorporated ESG factors into risks assessment methodology. But where do we go from there? Our very first sustainability report, due in early April, will detail our vision in ESG and how we aim at setting exemplary ESG standard for trade finance.”
Finally, we moved on to discuss the 130-year-old credit insurer’s upcoming digital transformation initiatives and its emphasis on customer service. “We are looking at new ways of digital distribution, more automation, and using artificial intelligence and big data to improve the way we underwrite, to improve the way we pay claims,” Holger said. “On the customer service side, we are in the process of launching our new online portal, MyEH, where customers can use a state-of-the-art, industry-leading platform to handle their policies on a daily basis. They will also have access to a lot of business critical information and economic data which will allow them to make better decisions in the future than they were able to in the past. The whole element of service delivered through digital solutions is our key focus. I truly believe this will continue to build on our competitive edge and to keep Euler Hermes in the lead in the global trade credit insurance market.”