A new digital marketplace for trade credit insurance is now live, allowing financiers and corporates to request insurance with multiple underwriters through an online process.
LiquidX, which already operates a trade finance marketplace, has been working with insurance broker Marsh and two underwriters, Euler Hermes and Atradius, to build the platform.
It is now live in the US, and LiquidX expects to roll it out in Asia in Q2 and the UK by the end of the year as it receives the necessary regulatory approvals.
Named the LiquidX Trade Credit Insurance Marketplace, the platform gives banks, non-bank investors and corporate suppliers the ability to directly access the trade credit underwriting market for insurance. Users can request quotes from multiple underwriters and electronically execute and process insurance policies.
It is not the first platform that seeks to bring a multi-underwriter marketplace model to trade credit insurance. The industry recently saw Liberty Specialty Markets launch Toredo, a solution which similarly gives access to insurance capacity online and is available to insurance brokers and their clients.
LiquidX Trade Credit Insurance Marketplace, meanwhile, is targeting the insured directly, and is open to anyone, including institutions that are not clients of Marsh. It streamlines a process that is often lengthy and lacks transparency: today, a financier or corporate would typically have to go through a broker to get a quote from the underwriting market – a process that Glenn Kocher, managing director at LiquidX calls “broken, inefficient and manual”.
“Today the process for the insured is expensive and opaque – you pick up the phone, call your broker, your broker goes out and talks to a bunch of underwriters, comes back with a bunch of quotes, and you have to try to figure out, how do you compare between them, and you don’t have any visibility or control of that process. And it takes a lot of time,” he tells GTR.
The LiquidX Trade Credit Insurance Marketplace will also be connected to LiquidX’s financing marketplace, making it easy for investors to buy insurance cover for any acquired trade finance assets.
Initially the platform will offer non-payment coverage, but eventually expand into other types of insurance, including political risk, contract frustration and structured credit products.
LiquidX will act as the broker of record on transactions concluded on the platform, with Marsh as the co-broker. Marsh will perform advisory, policy administration and maintenance, and run eventual claims processes.
So far, Euler Hermes and Atradius are the only two underwriters to offer their products on the platform, but LiquidX expects to add another two to four carriers by the end of the year.
Kocher says the company is already in dialog with several insurers about joining. “The value proposition to the insured community is that it’s a multi-underwriter platform, for various purposes. Competition is one: people are interested in getting best execution on price. But there’s also a lot of differences between underwriters in terms of risk that they can take, the size of their balance sheet and appetite, and their areas of expertise,” he says.
He expects that LiquidX Trade Credit Insurance Marketplace will not only be beneficial to users of the insurance, but also to the trade credit insurance market as a whole.
“For the brokers and underwriters, this is an opportunity to expand the marketplace,” Kocher explains. “Regions like the US and Asia are very underpenetrated compared to Europe, and one of the challenges is getting the product out in front of more people and making the purchasing process more convenient. Often users are put off buying a policy because the process to get started is so burdensome. If they can make that more efficient, then take-up is going to be better.”