Page 16 - Insurance Times August 2018

International
USA tariffs may boost
trade credit insurance
business
The news of Trade wars between US
and other
countries
are looked
upon as a
great oppor-
tunity to in- Chubb and XL Group haven't provided too many specifics. On its face, providing
surers. US President has set off fears
of a global trade war with tariffs on
metals and an array of imports from
China and other countries. Insurers are
sensing an opportunity in demand of
credit insurance products to tide over
possible adverse market conditions.
Trade credit insurance protects com-
panies from the risk that buyers will
be unable to pay. If governments
implement more tariffs, it could in-
crease the cost of production and
ultimately put stress on retailers and
distributors to either raise prices on
consumers or shrink profits. If the
stress is enough to put the buyer out
of business, the supplier would acti-
vate its trade credit insurance to get
reimbursed for defaulted payments.
Trade credit insurance has been rela-
tively slow to catch on in the US. The
global market is about $7 billion of
premiums, mostly in Europe, accord-
ing to the International Credit Insur-
ance and Surety Association. Of that,
$1 billion is attributed to companies
in the US.
16 The Insurance Times, August 2018
News
Crypto insurance, the next hot business
In the staid and buttoned-up world of insurance underwriting, few want to talk
about it. You won't find many advertisements
promoting it, or details on company websites
offering it.
But according to industry insiders, there's a hot
new business that more and more firms are
looking to get into: crypto insurance.
It's understandable why big names like AIG,
coverage to crypto start-ups might seem borderline absurd. It's an industry with
a well-deserved reputation for being like the Wild West - an unregulated digital
frontier where frauds and heists are rife (recall the hacks of Mt Gox, and more
recently, Bitfinex and Coincheck) and get-rich-quick schemes abound.
The collapse in the price of bitcoin this year has not helped matters either. But
as cryptocurrencies, and their underlying blockchain technology, slowly gain
broader acceptance, some insurers are betting they can avoid the pitfalls.
The premiums from insuring such risk can be substantial. By some accounts,
underwriters can charge a crypto-related company upwards of five times or
more than your average business for coverage against loss or theft.
"Insurance for cryptocurrency storage will be a big opportunity," says Mr Chris-
tian Weishuber, a spokesman for Allianz, which began offering individual cover-
age for digital-coin theft in the past year and was one of the few insurers that
agreed to talk about the issue.
"Digital assets are becoming more relevant, important and prevalent on the
real economy and we are exploring product and coverage options in this area."
While the cost is still beyond reach for many fledgling companies, Marsh &
McLennan and Aon, the two leading insurance brokers that help companies shop
for crypto policies, say business has been brisk this year. For the first time, Marsh
formed a team of 10 dedicated to servicing blockchain start-ups.
Aon, which claims to have over 50 per cent of the market for crypto insurance,
recently streamlined its standard policy form to speed up the underwriting pro-
cess. It has also seen some insurers tweak general company policies to include
crypto-specific protections.