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Nicholas Davies, head of trade credit at Markel International in Singapore, explains the advantages of Markel’s trade credit cover as the industry continues navigating through these turbulent times.
Published on March 17, 2023
Markel International, Asia
Demand for trade credit insurance in Asia is growing, particularly given the rise of non-payment risks due to economic uncertainties and geopolitical tensions. This trend is expected to continue in 2023, as countries navigate the lingering effects of the COVID-19 pandemic, Russia-Ukraine conflict, and a tightening interest rate environment. Indeed, insolvency rates increased in 2022 in Asia, with the largest increases in risk seen in India, Malaysia, and the Philippines, particularly in sectors such as hospitality, retail, and construction. To help companies mitigate some of these impacts, Markel provides a specific form of trade credit insurance: Multi-buyer XOL structures. Whilst continuing to protect companies against the risk of non-payment by multiple buyers, it differs critically from traditional ‘ground-up’ trade credit insurance by virtue of being non-cancellable. Inherent in this are a number of advantages:
- Secured protection. Provides clarity of protection against non-payment risks for a specific buyer or a group of buyers over the policy period, which allows companies to plan their business activities with greater certainty and predictability.
- Flexible pricing. We tailor our solutions around our clients, providing flexible premium structures based around utilisation with adjustable rates. This means that the insured company can budget its insurance costs more accurately.
- Coverage customisation. Policies can be tailored to meet the specific needs of a company, including the level of coverage, the types of buyers covered, and the policy period. In addition, specific discretionary credit limits can be granted to insureds; this feature permits greater autonomy in qualifying buyers under the policy and allows the insured company to maintain control over important buyer relationships and ensuring a light administrative burden.
- Improved access to financing. XOL policies can be used to secure more favourable financing terms and conditions, off-balance sheet benefits, and risk transfer solutions such as co-insurance and nominated loss payee structures.
- Enhanced credit management. Non-cancellable trade credit insurance can help companies improve their credit management practices by providing them with access to credit information and risk management tools.
Markel is a leading provider of multi-buyer trade credit insurance in Asia, supporting clients from our offices in Dubai and Singapore, as well as providing a link with our global teams in London and New York. We have an integrated risk and commercial function where our nominated underwriters are able to respond quickly, ensuring direct access to decision makers. Our flexibility across policy structures and wordings enables us to provide bespoke and innovative solutions for our clients in both the corporate and financial institution markets. From standard trade credit policies to larger bank-supported securitisation structures, we endeavour to provide comprehensive solutions to fit our clients’ risk strategy and business goals. As we are selective in our approach, we are seen as a good partner to our peers and participate in a number of syndications with other insurers.
In summary, non-cancellable multi-buyer trade credit insurance provides secured protection against non-payment risks. It also offers flexible pricing, coverage customisation, improved access to financing, and enhanced credit management. These advantages can help companies manage their non-payment risks more effectively and with greater confidence.
For more information, please contact Nick Davies in Singapore or Crystal D’Souza in Dubai.
About Markel International:
Markel International is a division of Markel Group Inc, a US-based holding company trading on the New York Stock Exchange (NYSE: MKL). Markel International writes insurance and reinsurance business through six divisions and through offices across the UK, Europe, Canada, Latin America and Asia Pacific. Markel International’s insuring entities include Syndicate 3000, Markel International Insurance Company Limited, Markel Insurance SE., and Markel Resseguradora do Brasil S.A. Its UK national markets business also provides legal and professional fees insurance cover as well as legal and tax consultancy services.