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MARINE | DIGITAL TRANSFORMATION In association with Concirrus
Time to wake the sleeping giant Last year was a one of real change for the marine insurance industry in which the adoption of digital technologies picked up pace. These technologies are being implemented to solve problems and drive efficiencies, but, Mark Phillips of Concirrus, the insurance focused software firm, believes the industry has failed to realise the sleeping giant that exists. Drawing on real-life cases and insights nurtured through collaboration with the industry and other insurtechs, he believes that the industry is on the precipice of an opportunity to do things differently. For the last 200 years, the insurance market has existed to provide solutions to the world’s most complex risk challenges and the most remarkable risk innovations in history. The risk transfer mechanisms it has created have rebuilt disaster zones and made the world a more resilient place, facilitating global trade, commerce and innovation. As we progress into 2020, the same value chain that has served the market so well for centuries is fragmenting with two distinct approaches coming to the fore. One that exists to serve traditional products to traditional risk categories and the other, centred around a new operating model and approach to underwriting and broking, driven by technology, and underpinned by the democratisation of The Marine Insurer | March 2020
data. Those embracing the new model have recognised that the world has changed and, with it, the risk that they serve.
RISK HAS CHANGED The world has become increasingly dynamic and connected, with a myriad of threats that no longer fall within the traditional lines of business categories and cannot be quantified based on experience or historical approaches. Super vessels such as the Pioneering Spirit are completely unique, cyber attacks on vessel systems are becoming more frequent, climate change is opening new trade routes and having a dramatic impact on the seas and US foreign policy is increasingly protectionist. Add to this connected ports, increased automation, the New Silk Road Initiative and the various global blockchain
initiatives, it is clear to see that we are undergoing a seismic transformation. We are seeing clusters of low orbital satellites being launched and technologies such as Satellite Aperture Radar making it viable to track all vessels globally, regardless of cloud cover or AIS signal. Data is becoming more widely available and machine learning technologies are enabling shipping companies to leverage this data to implement significant operational efficiency. As a result, insureds are becoming incredibly sophisticated in their approach to their underlying risk and are starting to demand more than cover from their insurers. As of December 2019, TradeLens, a blockchain-enabled digital shipping platform jointly developed by Maersk and IBM, has managed to onboard over 50% of global containerised trade. Imagine where it will be in a few years and compare that to the limited historical claims data sets that insurers use today. The result is a change in risk transfer behaviour, leading companies to retain more risk on their balance sheets, while seeking only specialist cover and services from specialist providers. There have been several high-profile examples of large accounts leaving the Lloyds market in favour of P&I. This has less to do with price and more to do with the core competencies of loss prevention and member services
