Marine insurers have been told technology will transform the way they work in future with the warning those who don’t change will flounder.
Insurtech, Concirrus has launched Beyond Covid: The Marine Insurance Resilience Blueprint, which draws on insights from experts at IUMI, Swiss Re, AEGIS London, Whitespace and others into the consequences of COVID-19 and key considerations for 2021.
Writing in the blueprint Andrew Yeoman, CEO of Concirrus said the pandemic had fundamentally changes the way in the insurance industry operates. It may not have created new challenges, but rather force the pace of change that was already underway.
However, he warned firms need to understand there is no option now other than to drive technology into the heart of their operations.
“We cannot ignore that Artificial Intelligence will outperform the very best actuaries in making predictions in near real-time,” said Mr Yeoman. “But, to make this work, you need huge amounts of data and so, the company with the best models, the most data and the smartest algorithms will be the one that will have a systemic advantage over those that do not.
“When a technology revolution of this kind comes around, the companies that ‘win’ will be those companies that put it at the core of their business model – the ‘Butfors’. ‘But for’ this technology, their business cannot operate, there is no people powered process that can economically substitute for the technology.
“We’re in a society today where cars are driving autonomously, stocks are traded by algorithms and risk is assessed by AI. This is one that’s going to change insurance for ever but let’s not forget all the people that make this market work.
He added: “Will there be bumps in the road? You better believe it. Will things fail? Absolutely. And, will we have days, weeks, months and years where we look back and say, ‘we didn’t expect that unintended consequence?’ Yes. But our overall direction of travel is correct and we now need to determine what our digital journey will look like.”
Richard Turner, (below) President of the International Union of Marine Insurance (IUMI) said: “Insurers, brokers, reinsurers and service providers have all had to adopt remote working practices without notice. A major trading hub, London has for decades operated on the basis of face-to-face negotiations. Having this personal aspect removed from daily operations is a major challenge, but I believe the industry has coped remarkably well so far.
“The market is currently being sustained by well-established relationships and networks but if the current crisis continued for a number of years (hopefully a worst-case scenario), we would need to establish new ways and methods to replace in-person networking.”
He added: “Business performance of marine insurance is directly related to the level of goods transported around the world. With the World Trade Organisation (WTO) forecasting a 13% YoY drop in world trade as a result of COVID-19, we can predict there will be reductions in premium volumes in the marine insurance sector, though the precise impact is as yet unclear. COVID-19 is not really causing any direct physical damage, but it is leading to an accumulation of risk due to ships getting stuck in port areas. The level of international trade in the coming months will show whether the situation is having long-term impact.”