Telematics is reshaping the marine insurance landscape and advanced data collection via sensors and GPS tracking continues to become more common, allowing insurers to gain valuable insights into vessel operations, known risk patterns and more.
Data can be a helpful tool for underwriters when assessing risk and crafting policy but understanding just how reliable that data is, how it was collected and what to do with it are critical steps in the process. Telematics provide underwriters with a slew of data, including who the operator was, battery surges, vessel speed and areas navigated in, weather conditions and more. But just as important is proper analysis to produce an accurate risk evaluation of a vessel.
To confidently make this determination leveraging telematics, historical data is required. This will have value moving forward for underwriters as they’ll know what happened with a vessel during its policy and can create a data reservoir for future assessments to understand long-term trends, analyze previous claims, safety of crew and operations, and more.
Another key point is privacy concerns. Knowing if carriers are sharing data on a wider network or if data is proprietary to them or the vessel owner is imperative to the success of telematics. Information is not always readily exchanged amongst carriers, and privacy, regulations and compliance can vary significantly across state and country borders.
A critical aspect of telematics for claims professionals is understanding what is known to insurance carriers when assessing risk and writing a policy. Understanding who data was made available to, how it was utilized, and whether it has a bearing on how a claim is handled are key to deciding on reservation of rights, issue of denial, and if something was material. This can make for a difficult legal position for claims examiners when data was shared but not analyzed properly by underwriters, potentially leading to lawsuits and settlements.
Exposure can be mitigated if data is provided to the claims examiners. If claims professionals are made aware of what raised red flags for underwriters, how decisions were made based on historical trend data, how data was collected and stored, then telematics can have significant value. With the number of variables associated with writing a risk and deciding what a good risk is, the benefits from this data may be strong for underwriting but are also very significant for claims. Examiners can dispel worries about what underwriters were, or were not, made aware of when a policy was written, and can evaluate if an action was taken based on what the owner represented about their vessel, and what impact that may have on the claim.
This represents a substantial grey area; however, around what data was available, how it was used, and how this influenced the writing of a policy. The future of telematics may be determined in the courts as this grey area is given more clarity, and in turn, the future of data-led decisions in marine insurance becomes much clearer as well.
