Trade Financing in a Post COVID World [Vesl Live Panel]

Last week, May 8, Vesl held its very first webinar with an economist, a trade lender, and a credit insurance specialist all in one panel.

Mr Asuncion, the chief economist of Unionbank, talks about the economic impact of COVID 19. and how the economic recovery will be a function of: 1)Vaccine / effective treatment / anti-viral drug versus Covid-19; 2)Public health response measures; and 3)Public sector economic support measures. He also forecasts that until the vaccine, we will have sluggish growth.

Meanwhile, Cliff Entrekin, managing director of Convergence Capital Group, shares his views on banks’ and alternative lenders’ state of financing in this pandemic. He also shares how businesses in emerging Asia can cope even without the help of government by using trade finance tools such as trade credit insurance.

Lastly, Raffy Rios, Founder of Synergy Capital Solutions, a veteran in the credit insurance world, talks about how post COVID insurance capacity may look like, with insurers’ “flight to quality”. He noted that we may see more insolvencies later in 2020 and in 2021 as suppliers will only receive notices of nonpayment from buyers later. Due to this, there is greater demand in trade credit insurance post COVID.

A lively Q&A followed the panel discussion.

What industries are generally avoided by trade financiers and bankers now?

Which ones are still welcomed?

What advice can you give businesses to come out financially strong after this crisis? 

Posted in Carlo Asuncion, Cliff Entrekin, Financing, Raffy Rios, Risk Management Tagged , , , , , , ,

3 Insurance Products We Need to Know as the Corona Virus Spreads

by Maureen Ledesma

The corona virus has put a strain in the global economy in the past 2 months. Offices have postponed meetings and events, governments have considered lock downs, tissue paper is running out!.

But what does this mean for you?

If you’re in the tissue paper and disinfectant industry, you are doing more than well. But if you’re in the events, travel and tourism industry, you are also down with the “slow-to-no-business” virus.

Aside from travel insurance that can refund your cancelled flight, what can other types of insurance do (have done) for you?

  •  Events and travel companies should have purchased comprehensive event insurance to refund disgruntled guests. This is to retain customer loyalty and brand reputation.
  • For businesses trading with countries badly hit by the virus, say for example you’re a local producer of plastic supplies for machines in Italy, your #1 concern is if that company in Italy can still pay you on time, or if they can pay at all. In this case, trade credit insurance will be your best friend, to help you confidently continue business with foreign counterparts. If the Italian company can’t pay or went bankrupt, insurers got your back.
  • If you’re a government, you can subscribe to the World Bank’s Pandemic Emergency Financing Facility (insurance linked securities) so it can provide your country or region with the needed liquidity and capital to help you in your response and recovery.

Do you feel bad for learning about these just now? It’s okay. It’s better late than never.  You’ll never know when epidemics like this hit, (And we’re sure this COVID-19 isn’t the last one) so having due protection is important. 

Posted in Risk Management Tagged , , , ,

Lockton partners up to boost SME growth

by Gabriel Olano

As first published on Insurance Business Magazine:

Many economies in Asia are considered emerging markets, and these economies are propped up by small and medium enterprises (SMEs). According to the Asian Development Bank, SMEs compose 98% of all businesses and employ 66% of the labour force in the region, and are rightfully called the backbone of the Asian economy.

SMEs, due to their limited financial capacity, are exposed to a huge risk of financial loss in case a buyer is unable to pay its commercial trade debt, usually due to bankruptcy or insolvency. In order to protect itself from catastrophic losses, a business can take out trade credit insurance.

However, in emerging markets such as the Philippines, trade credit insurance is virtually unknown, which severely limits SMEs’ ability to enter dealings out of fear that the other party may default.

“Trade credit insurance in the Philippines is underpenetrated, and relatively unknown,” Maureen Nova Ledesma, co-founder of Singaporean-Filipino financial technology start-up Vesl, told Insurance Business.

Furthermore, trade finance options for businesses in the country are quite limited, especially for small businesses, Ledesma said. Exporting is not supported for businesses three years old and below, due to international credit facilities requiring high collateral.

To help boost the profile of trade credit insurance in the Philippine market, Vesl partnered with re/insurance broking giant Lockton to raise awareness and uptake of the cover in the market. The agreement between the two firms was signed in March.

According to Ledesma, through the partnership, Lockton will use the Vesl platform to market trade credit insurance in the country. In July, they were able to complete the first round of marketing and information sharing. She remarked that the response from the business community has been positive, from both the SME sector as well as from large businesses, many of which are still unprotected by trade credit insurance.

Posted in Features Tagged , , , , , , ,
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