5 minute read
Digital acceleration in Asia
Asia represents the largest and fastest growing continental economy in the world and the insurance market continues to increase its share of the global marine business through well-established hubs in Singapore, Hong Kong and Shanghai. Mike Davies, formerly of AXA XL and member of the executive committee at IUMI, recently joined expanding insurtech Concirrus to help lead its expansion into this huge regional market. He provides a snapshot of the challenges facing the region and highlights why a data-driven approach is critical for businesses looking to ensure profitability, operational efficiency and portfolio growth.
Gartner’s former head of research, Peter Sondergaard, once said the following about the importance of data analytics: “Information is the oil of the 21st century, and analytics is the combustion engine.”
In other words, there’s little point in stockpiling vast amounts of data if it cannot be used to drive your business forward.
Coinciding with a hardening of the insurance market, the global pandemic has brought about significant challenges and has produced some interesting dynamics relating to broker submissions, underwriters’ assessment, and quote & bind processes.
Even before the onset of COVID-19, several insurance companies had withdrawn from the Asia marine insurance market because of volatile results and poor performance. This cycle of shrinking capacity is still in motion.
There is good news, however. Marine insurance premiums have increased, and anecdotal feedback indicates that current performance has improved.
Marine insurers are well placed to capitalise on the recovery in Asia, which is projected to be faster than the rest of the world. This, in conjunction with the accelerated push to digitalise and still limited insurance capacity, points to a positive recovery for those marine insurers that have the vision and strategy in place to act quickly and maximise this opportunity.
Local and regional insurers and brokers are now looking more closely than ever at how to solve their three most pressing challenges - improving profitability, reducing
operational expenses and ensuring portfolio growth.
What is clear is that marine underwriting companies must harness the power of data analytics to develop a profitable portfolio and open up new opportunities and revenue streams. Asia is extremely well placed to take advantage of this new world with its focus on insurtech and big data. Despite the challenges presented by the pandemic and continued hard market, this is an exciting time for the industry.
BEHAVIOURIAL DATA IS KING
This is where access to previously unavailable data and analytics could be the tipping point for insurers, reinsurers and P&I clubs because it will give them the ability to underwrite their existing portfolio more successfully. It will help them to confidently expand into new risk areas knowing that their decisions are based upon proven behavioural data.
Leveraging a platform like Quest Marine will ultimately equip marine insurance professionals to make better risk and pricing decisions. The platform is powered by bespoke machine learning that is applied to a vast and varied dataset, revealing behavioural trends and expected losses that are indicative of risk at vessel, cargo shipment and account level.
At portfolio level, this translates to significantly improved loss ratios by a minimum of 10%, plus the ability to use analytics to grow the book in new target segments. Add to this the ability to automate submission management and monitor aggregation at port and/or client bespoke zone and monitor sanction breaches in real time, and you have a marine analytics solution that is as unique as it is powerful.
DRIVING PROFITABILITY AND GROWTH
Put simply, adopting a data-driven approach is critical to ensuring profitability, operational efficiency, and portfolio growth.
All insurers have historical data within their existing portfolio. They are, however, not necessarily resourced to take full advantage of this data and this can limit growth and expansion into new areas of marine risk. They need support with the cleansing of their own data and conversion into a dataset that allows them to clearly see the strengths and weaknesses of their portfolio.
Insurers can also gain access to a far broader market model that continues to grow exponentially as more marine market data is added to the pool. This includes global data such as historical and real time vessel movement, performance and technical management, global casualty and weather analysis and accumulation of vessels and cargo in ports and high-risk areas including sanctions and war zones.
Covid-19 has brought about a huge increase in the use of electronic submissions methods such as email. The hardening market is driving brokers to add more underwriters to each submission. This has led to an overwhelming number of submissions to assess per underwriter.
Leveraging artificial intelligence (AI), email submissions including attachments can now be automatically ingested into a digital platform, augmented with risk profile data, and priced. This allows underwriters to quickly determine how new business fits their current risk appetite.
Platform integration helps deliver a seamless transition from receipt of email submissions to written policies. This streamlining of processes can improve underwriting productivity by over 400% and thus enable existing underwriting teams to review four times as many risks. This leads to a significant improvement in new business and renewal processing and, ultimately, written premium.
Mike Davies, Concirrus
PIVOTAL MOVEMENT
Digital transformation is as inevitable as it is powerful and challenging to execute. Right now, we are experiencing a pivotal moment of digital transformation and marine analytics is still in its early stages.
It is important to remember that technology develops exponentially - processing power doubles every 18 months! This means that in five years’ time, we will see incredibly sophisticated tools that enable better capital management and smarter ways of working in a digitalised marine insurance marketplace in which underwriters, brokers and shipowners alike focus on discussions that really matter and add value.
During the coming Marine Insurance Asia conference (April 21-23), we will expand upon how marine digitalization can not only lead to increased profitability and operational efficiency together with portfolio growth, but also portfolio management, consultancy, and enhanced risk management capability.
