Authored by: Mike Davies, Asia Client Development Director, Concirrus (Head of Asia)
DIGITAL ACCELERATION IN ASIA
Asia represents the largest and fastest growing continental economy in the world and the insurance market continues to increase its share of the global marine business through well-established hubs in Singapore, Hong Kong, and Shanghai. A data-driven approach is critical for businesses looking to ensure profitability, operational efficiency and portfolio growth.
The COVID effect
Coinciding with a hardening of the insurance market, the global pandemic has brought about significant challenges and has produced some interesting dynamics relating to broker submissions, underwriters’ assessment, and quote & bind processes. Even prior to COVID-19, several insurance companies had withdrawn from the Asia marine insurance market, driven by volatile results and poor performance, and this cycle of shrinking capacity is still in motion.
There is good news, however. Marine insurance premiums have increased, and anecdotal feedback indicates that current performance has improved. Marine insurers are well placed to capitalise on the recovery in Asia, which is projected to be faster than the rest of the world. This, in conjunction with the accelerated push to digitalise and still limited insurance capacity, points to a positive recovery for those marine practitioners who have the vision and strategy in place to act quickly and maximise this opportunity.
Local and regional insurers and brokers are now looking more closely than ever on how to solve their three most pressing challenges – improving profitability, reducing operational expenses, and ensuring portfolio growth.
What is clear is that marine underwriting companies must harness the power of data analytics to develop a profitable portfolio and open up new opportunities and revenue streams. Asia is extremely well placed to take advantage of this new world with its focus on insurtech and big data - it’s an exciting time for the industry.
Behaviourial data is king
This is where access to previously unavailable data and analytics could be the tipping point for insurers, reinsurers, and P&I clubs as it will give them the ability to underwrite their existing portfolio more successfully, and confidently expand into new risk areas knowing that their decisions are based upon proven behavioural data.
Leveraging a platform like Quest Marine will ultimately equip marine insurance professionals to make better risk and pricing decisions. The platform is powered by bespoke machine learning applied to a vast and varied dataset, revealing behavioural trends and expected losses that are indicative of risk at vessel, cargo shipment and account level. At portfolio level, this translates to significantly improved loss ratios by a minimum of 10%, plus the ability to use analytics to grow the book in new target segments. Add to this the ability to automate submission management and monitor aggregation at port and/or client bespoke zone and monitor sanction breaches in real time, and you have a marine analytics solution that is as unique as it is powerful.
Driving profitability and growth
Put simply, adopting a data-driven approach is critical to ensuring profitability, operational efficiency, and portfolio growth.
All insurers have historical data within their existing portfolio however, they are not necessarily resourced to take full advantage of this data, which can be limiting when looking to grow or expand into new areas of marine risk. They need support with cleansing their own data and converting it into a dataset that allows them to clearly see the strengths and weaknesses of their portfolio. Insurers can also get access to a much broader market model that continues to grow exponentially as more marine market data is added to the pool, as well as global data including historical and real time vessel movement, performance and technical management, global casualty and weather analysis, and accumulation of vessels and cargo in ports and high-risk areas including sanctions and war zones.
COVID-19 has brought about a huge increase in the use of electronic submissions methods such as email, and with a hardening market, brokers are adding more underwriters to each submission. This has led to an overwhelming number of submissions to assess per Underwriter.
Leveraging artificial intelligence (AI), email submissions including attachments can now be automatically ingested into a digital platform, augmented with risk profile data, and priced. This allows underwriters to quickly determine how new business fits their current risk appetite. Platform integration makes the transition from receipt of email submissions to written policies seamless. This streamlining of processes can improve underwriting productivity by over 400% enabling existing underwriting teams to review four times as many risks, leading to significant improvement in new business and renewal processing and ultimately, written premium.
Digital transformation is as inevitable as it is powerful and challenging to execute and right now, we are experiencing a pivotal moment of digital transformation, and marine analytics is still in its early stages. It is important to remember that technology develops exponentially - processing power doubles every 18 months! This means that in five years’ time, we will see incredibly sophisticated tools that enable better capital management and smarter ways of working in a digitalised marine insurance marketplace, where underwriters, brokers and shipowners alike focus on discussions that really matter and add value.
Marine digitalisation can not only lead to increased profitability and operational efficiency but also provide efficient portfolio management, consultancy, and enhanced risk management capability.