Marsh, the world’s largest insurance broker, is starting a blockchain pilot for placing insurance for trade credit. Called the Risk Exchange, the trial involves clients Dow Inc. and SharkNinja who will buy trade credit insurance via the broker. And the insurers are AIG and Euler Hermes.
Typically when insurance is placed, the process lacks transparency for clients. The client gives information to the broker, who then goes to the insurers. The carrier will provide a quote which the broker will feed back to the client. In the case of trade credit, the information that the insurer needs is about accounts receivables.
So by putting the data that the insurer needs on a blockchain, there’s the potential for all parties to see the whole insurance process in real-time and receive notifications. The client can see the placement process, and it’s clear when the risk is covered.
“Digital platforms powered by blockchain are ideally suited for organizations that either generate or finance large amounts of account receivables,” said Nick Robson, Global Credit Specialties Leader, Marsh JLT Specialty. “By digitizing the invoices, payments, and other trade and insurance documents of the parties involved, we can streamline the trade credit insurance placement process, drive efficiencies, and improve the overall buying experience.”
The concept came out of a hackathon, and Marsh Digital Labs developed it further. Marsh Digital Labs is a member of the Enterprise Ethereum Alliance. However, the Labs used Hyperledger Fabric for this project, the same technology used in another Marsh project for commercial proof of insurance. Carriers have a choice to run their own nodes or connect to the network via APIs.
There are numerous blockchain trade finance initiatives. We asked Marsh whether this project focused more on un-financed credit and whether they planned to link into the trade finance networks. A spokesperson responded: “Other digital solutions providers are already working on various aspects in the Trade Finance space with regards to invoices, payments and the like.”
“Marsh’s Risk Exchange platform will provide an efficient, secure and interactive online insurance placement experience, allowing Marsh to support its clients as they digitize their business within the segment and support future innovation. The Risk Exchange will also explore integrating with other systems in the Trade Finance space in the future to provide a seamless and complete insurance solution for clients.”
One of the insurers, AIG, has been involved with other trade credit blockchain projects involving TradeIX.