Marine Insurance Sails To The Forefront of Insurtec
Written by: YOURS INSURANCE AGENCY, August 19, 2019
Who would have thought Marine insurance would be at the centre of the InsurTech revolution? The relationship between InsurTech and marine insurance is not an obvious one for many people.
Marine is one of the oldest and most traditional classes of business, the origins of Lloyds of London, when from 1686 members of the shipping industry congregated in the coffee house of Edward Lloyd to arrange early forms of marine insurance.
However, this month has seen two announcements that firmly place marine in the centre of the technology revolution impacting insurance.
First, Maersk announced they are building a blockchain-based marine insurance platform with EY, Guardtime, Microsoft and several insurance partners and secondly a UK-based technology company, called Concirrus, announced the launch of the first AI powered marine insurance analytics platform.
At Yours, this was not surprising.
In the first half of 2017, as part of our thesis driven investment approach, we highlighted commercial insurance as a key area of focus and within that our first product vertical to focus on was marine insurance. What led us to this conclusion?
Commercial marine insurance is a $30bn premium market, it’s complex and fragmented, and through our analysis we identified a significant potential shift in profit pools over the next few years and importantly the emergence of Internet of Things (IoT) and other devices has created a wealth of data within the industry. Marine also sits at the heart of global supply chain logistics.
During our deep dive into the sector and having spoken with over 40 market participants across various parts of the value chain it became apparent that marine insurers (and shippers) have never had so much data (internal and external) available to them, and many don’t have the tools or skill set to take advantage of it.
Growing competition, underwriting capacity and downward pressure on pricing has given little room to manoeuvre but we were intrigued and kept digging.
The ability to gather and analyse these new information sources is helpful but more important will be driving actionable insights through well informed decision making based on high quality, real time data and analytics to improve risk selection, pricing claim management, whilst helping the insured better manage their risk. As with many parts of InsurTech the underlying driver is the move from pure risk transfer to risk mitigation, and the move from prevention to prediction.
The creation of marine analytics solution platforms provide tailored insights to users, which is an important first step. Currently, software and tech providers to the marine industry are fragmented with no dominant vendors and no joined up end-to-end solutions.
As the market matures, the ability to harness analytics capability at the front end with improved efficiency at the back end through block-chain or other initiatives creates an even more compelling story and is an area we will be watching with interest.