Interview with Stuart Lawson, CEO of Aon Credit Solutions, the leading credit insurance brokerage firm facilitating credit insurance for over USD 700 billion worth of global trade, looks at how credit insurance impacts trade finance
Stuart Lawson in the past decade has noticed an increasing demand for insurance products to facilitate trade financing. Lawson believes that corporates are hunting for ways to achieve additional or more competitive access to working capital and financing, and must build a wider network of funding partners by looking beyond core relationship banks.
This is where credit insurance helps and is strengthening trade finance as an asset class. “More than 50% of our new business enquiries are linked to a financing motivation and objective,” says Lawson. He adds that the penetration of credit insurance is below 20% and that technology such as Fineon’s can increase the visibility and awareness of insurance products.
Using FinTech platforms for insurance
“Technology allows you to access markets and clients that you probably wouldn’t be able to otherwise,” says Lawson. “The challenge for brokers is, how does credit insurance reshape itself to blend with Fintechs? Lots of insurers have an appetite to embrace platforms and Fintechs but they’re not sure how. There is still a difference between what Fintechs are doing, which is usually transactional, financing one-off transactional export contracts, and the insurer’s natural wish to have portfolios. How do you combine the two to create a seamless product that doesn’t undermine the efficiency and simplicity of the platform?”
|Credit insurance improves access to funding and financing terms|
Fineon Exchange & Aon strategic collaboration
The answer, says Lawson, is through initiatives such as the Fineon platform, for which Aon acts as credit insurance broker and advisor, managing Fineon’s credit insurance offering that creates financial awareness and is built around the needs of everyone in the trade lifecycle. According to Lawson.
“The convergence between insurance and funding is becoming more apparent and is increasingly the direction of travel for our business. More than 50% of our new business enquiries are linked to a financing motivation and objective. Our collaboration with Fineon Exchange fits perfectly with this trend. Through the Fineon Platform we will see the further coming together of credit insurance and funding”. He adds “We encourage this and are ready to respond to the credit insurance needs of the Banks/Funders and Exporters via the Platform.”
Insurance as an enabler of finance
In Europe, Lawson says the demand for credit insurance is increasing. Brexit has certainly added to the risk factors pushing this demand, and credit insurance can negate some of the Brexit uncertainty and volatility. However, Lawson says that for credit insurance to really take off, insurance products must be enablers of finance, not just risk transfer tools.
From Aon’s perspective, credit insurance and funding go hand in hand. “Our role is not only to help clients find an insurance solution,” says Lawson. “We want to help them find a funding solution as well. Convergence between insurance and funding is becoming more apparent, and it’s increasingly the direction of travel for our business.”
“Fineon Exchange has an extensive understanding of the funding markets that constitute tangible benefits for its clients over and above the traditional methods”
– Stuart Lawson, CEO, Aon Credit Solutions
This article was previously published by Fineon, a client of The Realization Group, HERE