XL Catlin’s North America Construction insurance business has teamed up with construction tech start up, TradeTapp, to provide Subcontractor Default Insurance (SDI) clients with access to the platform that helps contractors do a better job of evaluating subcontractors before hiring them.
TradeTapp uses an algorithm based on industry data to identify risks and compile historical, financial and other infomation on subcontractors into profiles that include financial benchmarking, ratio calculations and maximum exposure recommendations.
According to TradeTapp, 25 percent of specialty contractors fail over a two-year period. SDI insurance covers the economic loss suffered by contractors caused by performance default of their subcontractors.
“Subcontractor selection is a largely a broken process in construction. Too many decisions are made without proper visibility into what’s happening downstream because contractors aren’t able to leverage industry data, particularly within the region they’re operating in,”Justin Levine, founder of TradeTapp.
He said the TradeTapp platform is designed to both identify risk as well as provide suggestions for specific controls that can be put into place to help mitigate any concerns.
TradeTapp’s product also allows its clients to evaluate prospective projects and makes risk mitigation recommendations.
According to Jason LaMonica, profit center head, Subcontractor Default Insurance business of XL Catlin’s North America Construction team, the new tool can help the insurer’s SDI customers “avoid the hefty financial losses and reputational damage that can occur when a subcontractor defaults and is unable to finish contracted work.”
LaMonica said TradeTapp boosts his clients’ risk management as well as his own team’s.
TradeTapp was founded in February, 2016 by Levine, James Blouin and Neil Tan. Prior to starting TradeTapp, Levine spent three years as a risk manager for a large general contractor.
In March, the New York based startup raised $500,000 in equity investment financing. The financing round will remain open through the end of June.
TradeTapp says it will use the funding to supplement its development efforts, as well as to build out its sales team in 2018. The company has plans for additional product features targeted towards the insurance marketplace, and said it will need dedicated business development personnel to help market their products.
“TradeTapp began as a subcontractor qualification tool which closely aligns with the construction insurance marketplace,” said Levine. “There are so many transactions and touch points between those two parties. In the long term, TradeTapp has the capability of becoming the primary conduit between insurance company and contractor, providing much needed efficiency to the underwriting process.”
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