All Aboard the Digital Train

Insurtech providers are facilitating a more efficient insurance market for both buyers and sellers. Brokers must stay ahead of the learning curve to remain competitive.
By: | September 12, 2017 • 4 min read

Insurtech firms — many with the financial backing of big name insurance groups — are fast making cheap, digital P&C procurement the norm.


By and large though, they don’t see themselves as disruptors. They prefer to be perceived as revolutionaries — transformers of the market.

Commercial brokers targeting the SME sector would do well to pay attention, and to commit to staying up to date with the rapid pace of changes to come.

“Existing brokerages aren’t built to serve the needs of smaller or medium-sized businesses. The big guys can’t service them efficiently, and the smaller brokerages don’t have the resources, market access or vertical expertise,” said Matt Miller, CEO of start-up Embroker, launched two-and-a-half years ago.

“Carriers are thinking hard about how to develop digital strategies without alienating and disrupting their existing distribution networks,” said Sofya Pogreb, COO of Next Insurance, which serves 6,000 small businesses through its platform with the backing of powerful investor-partner Munich Re.

“Companies like ours do pose a threat for the traditional distribution channels,” she said. “Insurtech will either replace the agent or provide them with better tools so they can focus on offering expertise to customers rather than moving paper applications around — I suspect a mix of both.”

Sofya Pogreb, COO, Next Insurance

Small local brokers for whom SMEs are their bread and butter may be particularly concerned, though Keith Moore, CEO of Coverhound, is keen to work in partnership.

“Rather than disrupting, we think we’re enabling market segments that have been underserved. We’re also giving small local brokers a better way to transact. We want to help facilitate the transaction, and are indifferent as to how the business is placed,” he explained.

“Anyone who said the traditional broker is dead is a fool,” said Insureon CEO Ted Devine. “However, agents and brokers are going to have to embrace some of the technologies we are leveraging to make their solutions more efficient and deliver more value for the customer.”

Many of those new technologoes will soon be essential for brokers to grow and sustain their business.

“We bid on 400,000 keywords every day and have massive models to make sure the return on every bid is right, and we’re doing some cool things with machine learning to deliver the best product to the customer.

“This is very hard for a broker to do, so they’re going to have to raise their game to be at our level,” said Devine, adding: “The best ones will.”

Forging Ahead

While Insureon, Embroker and Coverhound all pride themselves on providing human expertise to help buyers find the right solutions, their real competitive advantage will always be driven by their tech capabilities. Some, like Next, are happy to limit human interaction to a minimum.

“On certain larger or more complex risks, perhaps an engine can’t make all the decisions and human expertise is needed — at least in the near term,” said Pogreb, though others feel insurtech may have a role to play higher up the food chain fairly soon.

Miller believes Embroker’s model is “just as relevant” to large, complex commercial risks, though he admits that it will be a challenge overcoming “entrenched” buyer behavior, while Devine thinks big commercial risks could benefit from automated panels.

“Agents and brokers are going to have to embrace some of the technologies we are leveraging to make their solutions more efficient and deliver more value for the customer.” — Ted Devine, CEO, Insureon

“I’ve been surprised how much appetite there is for an alternative way of transacting among larger commercial accounts,” said Miller. “It shouldn’t cost so much to access insurance in a digital world, and companies are increasingly looking at their efficiency ratios.”

Matt Miller, CEO, Embroker

He believes the implications of the swathes of data captured through insurtech will be “profound” for the insurance industry, helping improve underwriting efficiency and risk modelling.

Next is planning to move beyond pure distribution into the development of proprietary products tied to the distribution engine and react to data in real time — essentially creating intelligent, ongoing optimization of coverage. “That’s not happening in the traditional market at all.”

This is one area where brokers could wrestle back some advantage by taking the lead in the development of wearables, telematics and other data sources to bolster risk modelling and real-time insurance cover.

Doug Turk, chief marketing officer at JLT Group, acknowledged that insurtech is a risk for brokers, who he said should already be investing in research and development and tech partnerships.


“The broker of the future will have to be incredibly information literate. They’ll have to understand all the different sources of information available about their clients’ operations and risks.

“They’ll have to be willing to separate themselves from the way things have been done in the past and accept that there may be better ways to do things, particularly when it comes to how risk is underwritten and rated,” he said.

Alternatively, some agents and brokers might choose to explore the other side. “We’re certainly hiring,” said Embroker’s Miller. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Marine

Crewless Ships Raise Questions

Is a remote operator legally a master? New technology confounds old terms.
By: | March 5, 2018 • 6 min read

For many developers, the accelerating development of remote-controlled and autonomous ships represents what could be the dawn of a new era. For underwriters and brokers, however, such vessels could represent the end of thousands of years of maritime law and risk management.

Rod Johnson, director of marine risk management, RSA Global Risk

While crewless vessels have yet to breach commercial service, there are active testing programs. Most brokers and underwriters expect small-scale commercial operations to be feasible in a few years, but that outlook only considers technical feasibility. How such operations will be insured remains unclear.

“I have been giving this a great deal of thought, this sits on my desk every day,” said Rod Johnson, director of marine risk management, RSA Global Risk, a major UK underwriter. Johnson sits on the loss-prevention committee of the International Union of Maritime Insurers.

“The agreed uncertainty that underpins marine insurance is falling away, but we are pretending that it isn’t. The contractual framework is being made less relevant all the time.”

Defining Autonomous Vessels

Two types of crewless vessels are being contemplated. First up is a drone with no one on board but actively controlled by a human at a remote command post on land or even on another vessel.

While some debate whether the controllers of drone aircrafts are pilots or operators, the very real question yet to be addressed is if a vessel controller is legally a “master” under maritime law.


The other type of crewless vessel would be completely autonomous, with the onboard systems making decisions about navigation, weather and operations.

Advocates tout the benefits of larger cargo capacity without crew spaces, including radically different hull designs without decks people can walk on. Doubters note a crew can fix things at sea while a ship cannot.

Rolls-Royce is one of the major proponents and designers. The company tested a remote-controlled tug in Copenhagen in June 2017.

“We think the initial early adopters will be vessels operating on fixed routes within coastal waters under the jurisdiction of flag states,” the company said.

“We expect to see the first autonomous vessel in commercial operation by the end of the decade. Further out, around 2025, we expect autonomous vessels to operate further from shore — perhaps coastal cargo ships. For ocean-going vessels to be autonomous, it will require a change in international regulations, so this will take longer.”

Once autonomous ships are a reality, “the entire current legal framework for maritime law and insurance is done,” said Johnson. “The master has not been replaced; he is just gone. Commodity ships (bulk carriers) would be most amenable to that technology. I’m not overly bothered by fully automated ships, but I am extremely bothered by heavily automated ones.”

He cited two risks specifically: hacking and fire.

“We expect to see the first autonomous vessel in commercial operation by the end of the decade. Further out, around 2025, we expect autonomous vessels to operate further from shore — perhaps coastal cargo ships. For ocean-going vessels to be autonomous, it will require a change in international regulations, so this will take longer.” — Rolls-Royce Holdings study

Andrew Kinsey, senior marine risk consultant, Allianz Global Corporate & Specialty, asked an even more existential question: “From an insurance standpoint, are we even still talking about a vessel as it is under law? Starting with the legal framework, the duty of a flag state is ‘manning of ships.’ What about the duty to render assistance? There cannot be insurance coverage of an illegal contract.”

Several sources noted that the technological development of crewless ships, while impressive, seems to be a solution in search of a problem. There is no known need in the market; no shippers, operators, owners or mariners advocate that crewless ships will solve their problems.

Kinsey takes umbrage at the suggestion that promotional material on crewless vessels cherry picks his company’s data, which found 75 percent to 90 percent of marine losses are caused by human error.


“Removing the humans from the vessels does not eliminate the human error. It just moves the human error from the helm to the coder. The reports on development by the companies with a vested interest [in crewless vessels] tend to read a lot like advertisements. The pressure for this is not coming from the end users.”

To be sure, Kinsey is a proponent of automation and technology when applied prudently, believing automation can make strides in areas of the supply chains. Much of the talk about automation is trying to bury the serious shortage of qualified crews. It also overshadows the very real potential for blockchain technology to overhaul the backend of marine insurance.

As a marine surveyor, Kinsey said he can go down to the wharf, inspect cranes, vessels and securements, and supervise loading and unloading — but he can’t inspect computer code or cyber security.

New Times, New Risks

In all fairness, insurance language has changed since the 17th century, especially as technology races ahead in the 21st.

“If you read any hull form, it’s practically Shakespearean,” said Stephen J. Harris, senior vice president of marine protection UK, Marsh. “The language is no longer fit for purpose. Our concern specifically to this topic is that the antiquated language talks about crew being on board. If they are not on board, do they still legally count as crew?”

Harris further questioned, “Under hull insurance, and provided that the ship owner has acted diligently, cover is extended to negligence of the master or crew. Does that still apply if the captain is not on board but sitting at a desk in an office?”

Andrew Kinsey, senior marine risk consultant, Allianz Global Corporate & Specialty

Several sources noted that a few international organizations, notably the Comite Maritime International and the International Maritime Organization, “have been very active in asking the legal profession around the world about their thoughts. The interpretations vary greatly. The legal complications of crewless vessels are actually more complicated than the technology.”

For example, if the operational, insurance and regulatory entities in two countries agree on the voyage of a crewless vessel across the ocean, a mishap or storm could drive the vessel into port or on shore of a third country that does not recognize those agreements.

“What worries insurers is legal uncertainty,” said Harris.

“If an operator did everything fine but a system went down, then most likely the designer would be responsible. But even if a designer explicitly accepted responsibility, what matters would be the flag state’s law in international waters and the local state’s law in territorial waters.


“We see the way ahead for this technology as local and short-sea operations. The law has to catch up with the technology, and it is showing no signs of doing so.”

Thomas M. Boudreau, head of specialty insurance, The Hartford, suggested that remote ferry operations could be the most appropriate use: “They travel fixed routes, all within one country’s waters.”

There could also be environmental and operational benefits from using battery power rather than conventional fuels.

“In terms of underwriting, the burden would shift to the manufacturer and designer of the operating systems,” Boudreau added.

It may just be, he suggested, that crewless ships are merely replacing old risks with new ones. Crews can deal with small repairs, fires or leaks at sea, but small conditions such as those can go unchecked and endanger the whole ship and cargo.

“The cyber risk is also concerning. The vessel may be safe from physical piracy, but what about hacking?” &

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]