No Such Thing as a Silver Bullet

Here’s a question you don’t get asked every day: what have werewolves and the Lloyd’s marine insurance combined ratio got in common? Well, aside from both being the stuff of nightmares, legend has it they can each be brought down by a silver bullet.

While we can’t speak for werewolves, we don’t believe there is a silver bullet for marine insurers. Artificial Intelligence (AI) and big data can help improve their fortunes to a degree, but it takes far more than that.

This might sound counterintuitive coming from a maritime risk analytics company like Windward. But after spending the best part of three decades in the London market, I’ve come to view the marine insurance industry as a precision chronometer: it has multiple moving parts and, if well-engineered and synchronised, can be the essential element of charting a course.

We recognise that improving loss- and expense-ratios is a goal, not just a process. It involves much more than a deep analysis of the portfolio and the business (though this is a crucial first step). But to achieve a sustainable change in combined ratios one needs to think comprehensively about the various challenges within the marine insurance business.

Collation of data and deep-dive analysis of year-on-year changes can streamline the underwriting process and make it more efficient – especially in a marine insurance market that has been resistant to new technology, partly due to the complexity of the business. However, in a recent survey conducted by Windward underwriters revealed what they liked least about the underwriting process: data gathering. The actual underwriting, decision-making and negotiation of risk participations fared much better.

At Windward we are committed to accelerating the process of getting underwriters to where they want to be and to enable them to apply their expertise where it’s most effective. So whether it’s the heavy-lifting of data in collating underwriting information, or providing loss-predictive risk scores to enable the comparison of fleets, data analytics can add value at every step.

The same can be said of claims, compliance and risk management. These disciplines are pillars of the insurance process; each one can be enhanced by the integration of data analytics. Claims investigations can be accelerated and settled more quickly (this benefits the entire insurance supply chain, not least by ensuring client satisfaction). Analysis of a vessel’s track and speed overlaid with weather, charting data and satellite imagery can prove invaluable in obtaining real-time analysis of the events leading up to a casualty. This data can also facilitate vessel monitoring to ensure compliance with international sanctions, such as those against North Korea.

At Windward we’ve learnt a lot about our clients over the last two years. Evolution of the insurance process is essential; technology is key. But to get the most out of big data and AI, business processes must evolve. The different disciplines within an insurance company must complement each other. Underwriters and actuaries must work together. Compliance and claims must be dealt with efficiently so that they don’t become an impediment to the efficient transaction of business.

All these things must happen in order for the industry to survive and thrive, to innovate insurance products and deliver new revenue streams. Insurers that fail to do so will find themselves at the rear of the pack – all the easier to be picked off by a marauding werewolf.

Nick Maddalena is Windward’s Head of Insurance Business

To learn more about the Windward Insurance Suite or to request a demo, please visit www.wnwd.com/insurance