Loadsure reveals spot freight market plans after £1.1m funding

No comments

The spot freight market has a complex value chain, and operating in a time-critical environment can be expensive for the broker, this insurtech MGA hopes to change that

After securing £1.1m in funding earlier in April, Loadsure set its sights on the spot freight market

The insurtech managing agent (MGA) and Lloyd’s cover-holder has also bagged Convex’s Stephen Catlin as its board advisor and was selected as part of Lloyd’s fourth cohort for its Lloyd’s Lab programme.

Speaking to Insurance Times, Loadsure chief executive and founder Johnny McCord said that the insurtech MGA is working on a clear agile roadmap for its future, and will add customer-led functions to its technology.

It hopes to offer an end-to-end cloud based solution that could help solve some of the challenges in the spot freight market by providing a fully digital cargo cover using predictive analytics.

And its claims to empower freight brokers, shippers and carriers to cut per-load insurance costs and accelerate claims settlements by five times faster via an automated claims system.

No stranger

The investment in Loadsure came about as McCord appointed venture capital and strategic advisory firm TSP Ventures to advise him on funding after several seed rounds with various angels.

Meanwhile, TSP Ventures introduced McCord to independent incubator Insurtech Gateway, and while Loadsure was not a typical incubation case due to the firm’s extensive insurance background and advanced startup stage, there were benefits that led to the investment from the incubator.

But McCord himself is no stranger to the insurance market, having spent 17 years as a Lloyd’s cargo broker handling shippers’ interest and general cargo business globally, before founding Loadsure in 2018.

He said: “Over the years it became apparent that given the demand for various insurance products in volume and transactional based industries, the process to buy and sell policies must be automated. The traditional process was slow, manual and the price was unnecessary high to cover the costs of human intervention.

“It also became clear in recent years that the US transportation industry, especially in the spot freight market, was becoming more and more digitalised, with load boards creating their own digital marketplaces and new players coming to market with their own hi-tech electronic platforms and ecosystems to meet the demands on the industry.”

McCord added that with recent challenges and rapid changes in the London insurance market, and innovation now at the forefront of the market’s mind after many years of resisting technology, Loadsure’s entry into both markets was perfectly timed.

Rising costs, slow claims

Speaking about the main challenges in the spot freight industry, McCord said that often freight brokers to use available trucking capacity when adequate insurance was not in place and faced with the rising costs of insurance, as well as expensive annual covers due to increasing underwriting expenses and exposures is cuts into their profitability.

Claims were also labour intensive, with a waiting period of up to 120 days to receive settlements that forced the shipper to cover the costs out of their own pocket. Some claims were also being denied or faced limited settlements, and all of this came in a time-sensitive environment where securing cover could be both time-consuming and expensive for the various stakeholders.

Meanwhile another challenge he noticed that shippers and brokers often faced was the risk of damage to the firm’s reputation if the goods did not get to the customer in their expected condition, as well as some clients discovering that they were unknowingly exposed to risk, as they relied on carrier liability policies – which is a gap in perceived and actual insurance protection.

All this was on top of the traditionally slow manual processes in place in the sector and the unnecessarily high costs as a result of the need for human intervention.

Catlin said the spot freight industry is a huge market with a complex value chain where a significant volume is either not insured or underinsured, presenting a great opportunity for a disrupter such as Loadsure.

And McCord said Loadsure intends to capitalise on this opportunity by helping transportation and logistics companies address the uninsured or underinsured freight tons shipped in the U.S. each year.