Part four - Insights into innovation
If you’ve had the chance to read part one, two and three in this series, you’ll be up to speed with the challenges and opportunities in the marine insurance market and where data, technology, and a behavioural approach to risk, can start to make some significant impacts. If you haven’t read these, make sure to take a look before continuing on.
In this post, I’ll talk about what you can do once you’ve begun to leverage technology to segment and optimise your existing portfolio, and identify new sources of risk and opportunity.
The technology-enabled connected policy
The question is, how do you turn the results from the above into something tangible? The answer is implementing technology enabled connected policies - targeted coverage that reflects what a vessel is doing at any given point in time.
I say ‘technology enabled’ because you could argue that connected policies already exist today, but it’s currently a very manual process.
An example of an existing connected policy is a standard war coverage policy, where insurers collect adjustment premiums at the end of the year - relying on the good will of the owner to tell them where that vessel has been. With technology you can now analyse the historical behaviour of that vessel, and with enough data, you can even predict where it’s going to go and prepare.
The situational connected policy
Taking this connected policy to the next level, by tapping into behavioural data, you can create situational connected policies.
For example, with available transponder data, processing systems and optimised software, companies can identify situational rating factors that reflect what vessels are doing in real-time; enabling automated endorsements based on whether the vessel is in port, at sea, or leaving its usual area of operation.
This has benefit not only in making coverage more efficient and bringing insurer and customer closer together, but also unlocks new product offerings for particularly profitable segments. Specialised cover for embargoed fishing vessels, a new offering for the Bering Sea, or the ability to offer specialised cover for demolition voyages all become viable to rate, and easy to implement and manage.
The ultimate connected policy
So far we have looked at a connected insurance proposition that is predicated on movement data. However, with increasing investment from owners in sensor and risk management technology for a range of use cases, there is scope for connected insurance that not only offers targeted coverage, but also prevents loss.
One such technology is the Eniram SkyLight proposition. Through measuring hull vibrations, the Eniram SkyLight monitoring tool can derive data such as sea conditions, list of the vessel, speed through water and ultimately engine and machinery performance. By collating this information, Eniram helps its customers take the most optimal route, saving them on average 5% to 7% on fuel costs.
Given that machinery breakdown represents a significant proportion of attritional losses, the benefit for the insurer in being able to actively monitor the health of a vessel’s engine in real-time is obvious. However, this is only part of the story.
With rates down, insurers are turning to value proposition and services as a way to enhance their offering, either for retention or for pricing increases. With Eniram SkyLight a unique connected relationship is developed between insurer and customer where both parties win. The customer saves potentially millions on fuel costs, and the insurer earns the right to actively monitor the performance of customers, gathering data that no other insurer has access to. Further, the role of the insurer changes to active risk manager, not only providing cover, but advising insureds in real-time of the risk and avoiding losses for everyone.
This series has focused on tackling the three major challenges currently facing the marine insurance industry - all marine insurance players are using the same static rating factors, policies are not personalised, and operating costs are prohibitively high.
I hope you can now start to see how data and technology can start to drive smarter distribution of capital, curb operating costs and increase profit margins.
If you’re interested to understand more about Concirrus, our work in the marine insurance market, take a look at this case study which directly illustrates the bottom line impact of our software Quest Marine.
Also, don’t hesitate to get in touch, via our website or connect with me on LinkedIn.