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A new electronic commerce initiative, backed by broker Sedgwick Ltd., will give international traders the opportunity to buy and sell goods and arrange cargo insurance coverage on the same electronic network.
The initiative, expected to be operational next year, will be the world's first combination of global electronic trading and insurance services, according to Tony Richards, head of marketing services at Sedgwick Ltd. of London.
He said Sedgwick is making a "rolling investment" in Full Service Trade System Ltd., a privately held company based in Bermuda that is the operator of the recently launched international TradeCard network. Sedgwick's role in the project is to establish underwriting services and act as a claims administrator for the network.
Mr. Richards said other insurance-related electronic commerce initiatives -- such as the World Insurance Network, of which Sedgwick is a founding shareholder -- are focused only on insurance and do not have the wide business scope of TradeCard.
"There is no conflict of interest" between TradeCard and other electronic commerce initiatives, he said. "Our position is to get as much hands-on experience in this area as possible."
The TradeCard concept was conceived by the World Trade Centers Assn., one of the world's largest associations for international trade, based in New York and represented in 97 countries.
The TradeCard network allows subscriber companies to buy and sell goods directly from their desktop computers through an electronic network provided by leading EDI supplier General Electric Information Services. A range of finished goods, such as clothing, furniture and machinery, are being traded on the network. The first transaction on the TradeCard network, a shipment of baby strollers, was conducted between companies from Taiwan and the United States on May 15.
The network allows buyers to create and send an electronic purchase order. Once the terms of the transaction are agreed upon, the order is digitally signed. The seller or freight forwarder then creates electronic shipping documents.
There are no limits to what can be bought or sold on the network, which is open to small- to medium-sized traders, as well as large multinationals.
Mr. Richards said Sedgwick has been working for the last six months to arrange underwriting capacity for the network. He said Sedgwick has lined up two leading international marine insurers, which he could not yet name, to provide insurance for transactions on the network. He expects underwriting services to be available on the TradeCard network by the first quarter of 1999.
The two insurers selected by Sedgwick will be the sole providers of insurance to the network and will underwrite marine cargo and air freight coverage.
When the insurance option becomes available on the TradeCard network, users will be able to click on a computer icon to select insurance quotes and electronically purchase coverage. Mr. Richards said there will essentially be no broker involved in the transactions, as buyers can deal directly with insurers over the network. Sedgwick will receive a commission for its underwriting and claims administration services.
Sedgwick will act as claims administrator for the network and will develop a transaction-by-transaction electronic audit trail. This data will be available to network users and underwriters to analyze claims history and trading transactions.
Mr. Richards said the major advantage of TradeCard's insurance facility is that it allows traders to order goods and arrange insurance for their shipment on the same network. It will also cut down on paper-based transactions and enhance the speed and operational efficiencies of international trade, he said.