Few might have imagined its impact when Malcolm McLean introduced the shipping container to the world in 1956. Before his invention, lots of small cargo required excess handling, making the process costly, inefficient, and prone to losses. Because of the shipping container, global intermodal transportation was born.
As containerisation disrupted the shipping industry, data and digitalisation are poised to do the same for marine underwriters. It’s going to change everything.
Marine insurance’s long history has made old habits hard to break. We have clung to paper, pencils, and manual processes perhaps a little longer than other lines of insurance. Today, underwriting has evolved to harness the power of data analytics and new technologies to gain a better understanding of marine risk than ever before. And we have just begun.
A better understanding of risk
New monitoring tools already provide tremendous value in helping marine underwriters monitor exposures and risk aggregations.
When Russia invaded Ukraine, for instance, knowing precisely what marine exposures were in Ukraine was critical. AXA XL’s Poseidon platform, a proprietary shipping vessel monitoring tool, provided us with near-real-time data on exactly where our insured vessels were. Using world fleet data, we made credible estimates of our cargo exposures. Through Poseidon, we see a comprehensive view of our clients’ assets and their exposure to perils. Our clients can receive real-time alerts and advice from our prevention experts.
Data-driven ratings and products
Getting to a point where we have enough information to analyse trends and do predictive modelling will enable us to support marine underwriters to make more data-led decisions, which differentiate on price or terms for individual risks.
The products we provide might also change. Not long ago, pay-per-mile auto insurance was a foreign concept. With telematics, usage-based auto insurance became a reality. Could marine find a similar technology-driven model that accounts for fluctuations in exposures throughout the year?
We are seeing a sharp rise in technologies providing solutions for the marine industry – from companies tracking vessel spoofing to others looking to track cargo accumulations around the world in real-time. More such tools could spur new marine insurance products like parametric and carbon offset products, supporting companies’ ESG efforts.
Stronger partnerships with clients and brokers
Leaping data-driven marine underwriting requires a mind shift. We need access to available information and collaboration across the value chain. Not everyone is comfortable sharing data. The information needs to be accurate so that the inference is correct. Changing minds will require us to show data’s big benefits.
The most significant change will be the insurer-customer interaction – moving from a transactional relationship to a risk management partnership.