2222222222

IUMI 2017 Preview

Technology Takes Center Stage in Tokyo

IUMI’s annual meeting in September will offer a rare glimpse into local markets.
By: | August 30, 2017 • 4 min read
Topics: Marine | Underwriting

The official theme of the International Union of Maritime Insurers (IUMI) annual meeting in Tokyo September 16-21 is “Disruptive Times – Opportunity or Threat for Marine Insurers?” and one key focus will be on technology issues, including cyber threats and Big Data. But the conference will also be an opportunity to see the Japanese market from the inside, a perspective that few international underwriters and brokers have.

Lars Lange, secretary general, IUMI

“In the Tokyo market there are not many foreign insurers,” said Lars Lange, secretary general for IUMI, “but Japanese insurers are very active in the rest of the world. There was a concern after the massive Fukushima earthquake in 2011, everyone expected massive losses. But that is not a problem though; the national market in Japan is fairly balanced. They write and cover it locally.”

In terms of cargo premium, Japan is the second or third largest market in the world, Lange noted. Underwriters seeking to enter the market would do well to consider their core competency. “Is it coverage and claims, is it technology, is it distribution?” Lange asked.

“Insurers have to deal with their own business first, and then extend that to their customers,” he continued. “It is especially the case in marine insurance what clients need from us is risk assessment, loss prevention, and identification of emerging threats. Every company struggles with cyber threats. This is an area where we can do a great service to our clients.”

Advertisement




There is still a lot of ground to cover, even for the bigger companies, in areas like the Internet of Things and Big Data. There is a lot to be learned,” Lange said. “Once ways of addressing that are put in place, then that can be recognized in the premiums. The more precise your knowledge of risk the better you are able to allocate capacity at the appropriate price.”

Lange related an instance of how technology is changing both the operational realities of the maritime industry, and also the way operators and underwriters are responding to risks.

“I spoke to the chief executive officer of a major classification company, and he told me that one operator acquired a 3D printer and a supply of metal powder to provide spare parts aboard a ship.”

How well that will work in the rigors of shipboard operations, and if it lowers repair costs or boosts efficiency remain to be seen. But Lange sees an inevitable trend. “It is not unlikely that developments like this will only accelerate.”

 “It is especially the case in marine insurance what clients need from us is risk assessment, loss prevention, and identification of emerging threats.” — Lars Lange, secretary general, IUMI

The conference starts with members-only committee meetings on Sunday. They are not open to general attendees, but Lange said he does not expect there to be any major or contentious issues discussed. The first-timers’ reception and welcome reception that evening are open to all.

On Monday morning is the president’s address to the plenary session, a state of the union report to all delegates and the industry. “Dieter Berg will give his view on the industry,” said Lange. Another highlight of Monday morning will be the annual facts and figures presentation with data on growth and claims, along with the macro-economic outlook from the chairman of the Facts & Figures Committee.

Monday afternoon the macro view turns to the future with the cargo workshop. That will focus on the economic outlook for the maritime industry. Topics to be addressed in the workshop include specialized cargo markets, freight-forwarder liability insurance, and smart logistics. There will be a press release with key findings which Lange added, “is always extremely interesting.”

Advertisement




Tuesday afternoon will include the ocean hull workshop, and separately the legal and liabilities session. A main topic in the latter will be the bankruptcy of the big Korean containership line Hanjin last year, but also consolidation among Asian container-ship lines including operators from Japan, Korea, and China.

“We will get the view directly from the coal face,” said Lange. There are also likely to be discussions about new marine bunker fuel and emissions rules.

Wednesday morning, the loss-prevention workshop “always has good thinking,” said Lange. “It’s a great workshop. There will be discussion of weather risk management, also the Internet of Things and topics like blockchain technology in cargo, cyber, and data analytics.”

Wednesday ends with the “Japan Evening,” and the event closes with a meeting of the new executive committee on Thursday morning.

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]

More from Risk & Insurance

More from Risk & Insurance

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

Advertisement




“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

Advertisement




“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

Advertisement




“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.