This blog was published by The International Union of Marine Insurance in their March 2019 IUMI Eye newsletter.
Unprecedented change within the insurance market provides the possibility of harnessing existing and new data through technology to improve the quality of underwriting decisions.
Data from sensors is huge - it means that everything that was previously unknown can now be known. In the next five years, we’ll see two types of marine insurers – those who have a digital platform replete with data, analytics, machine learning and AI and those who ‘used to exist’. But, what does this new digital environment mean in real terms and what will be the associated impacts on the risk transfer market?
Currently, there are pockets of digital expertise within the actuaries, underwriters and claims departments where effective tools and data do exist. However, these are often silos within a single insurer and the tools and data differ across departments. When we ask our customers: “if you started to see an increase in claims from a particular port or a given vessel of class, how long would it take for that information to filter through from the claims to your actuarial process and your underwriting?” The answer is often: “maybe two years, but possibly never.”
This same degradation in information quality also exists across the entire risk transfer market. From the fleet through to the reinsurer, the risk clarity diminishes. Sharing of data and having a common understanding of that data would help to eradicate this challenge.
Although data is king, this isn’t about big data - it’s about delivering all the knowledge behind every decision in the most efficient fashion. Equipping the industry with the tools that allow existing data to be ingested, understood and presented in a way that provides valuable insights to help improve loss ratios will be the game changer. Question is: who’s ready to embrace this new super power?