Risk and Insurance Hub – Now Launched!
Today Trade Finance Global announced the launch of its Risk and Insurance Hub, at the KNect365 Insuring Short-Term Trade Finance Conference. A hub of content and educational resources on trade risk, credit insurance and trade credit, TFG have published a series of content on risk and insurance.
Popular Risk & Insurance Products
Guarantees – binding financial agreements between contracting parties and a third party which guarantee that contractual obligations will be met, and that financial penalties will be incurred if not.
Bonds – Flexible financial products underpinned by guarantees which ensure financial reparations to the bond holder if contractual obligations are not met.
Credit Issuance – A core financial product underpinning the import and export of goods across international borders whilst mitigating financial risk to both buyer and seller.
Sureties – A guarantee to protect investors against direct loss of investment in the event of a complete failure to fulfil contractual obligations (such as insolvency).
Claim Management – The process by which any claim against an insurance or guarantee product is handled by a bank or third party agent.
7 trends in the credit insurance market
We heard from Robert Nijhout, Executive Director ICISA at KNect365’s Insuring Short-Term Trade Finance Conference.
1. Pricing remains under pressure despite a deteriorating risk environment.
2. Credit insurers need to adapt to the on-going shift of trade flows.
3. Commercial superpowers in combination with big data, AI and digitisation present both an opportunity and a threat to the credit insurance business model.
4. Digitisation is continuing to lower barriers to entry for new market players, particularly with the reinsurance market.
5. Fraud will be an increasing reason to look for credit insurance but can be an uncontrollable risk for credit insurers.
6. Economic shocks are a severe threat to the credit insurance model – underwriters are certainly preparing for and predicting a recession in the next two years. So premiums are increasingly important for income at times like this.
7. Fintech and insuretech companies are potential partners or competitors to the industry.
Digitisation of trade credit insurance market – what’s happening?
Credit insurance is still geared towards a traditional way of doing business, which still falls short of how the average trade flow is digitising. Digitisation and platform technologies are moving from a b2c to a b2b model.
The blockchain structure that has been seen in certain segments is certainly a threat to the credit insurance space/ real time, less checks and transparency.
Fintech and insuretech are looking beyond their comfort zones to grow and succeed. But the threat often comes from outside, its not just as straight forward as employing simple
Engaging with the wider ecosystem: corporates, brokers and platform providers is critical to innovation and implementing digital solutions and breaking down silos. We’ve seen some good examples of digitisation over the past years – ATMs, payments etc which will create an enormous change in how credit insurance will look in 3-6 years.