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Danny: [00:00:32] Hello and welcome to Insurance Business TV. I'm Danny Wood, news editor of Insurance Business Australia. We've gathered a panel of experts to explore technology and what's often regarded as one of the more traditional insurance sectors, the marine insurance space. And we'll be focusing on cargo and logistics. This is a virtual roundtable sponsored by NTI, one of Australia's leading specialist insurers and home to the country's largest team of marine insurance specialists. We're joined by Daniel Morrison, head of NTIs Marine Portfolio. Kurt Herron, logistics risk engineer at NTI. Veenet Muthraja, head of Marine business at Munich Re Specialty Reinsurance and Mark Rudman, national head of Marine at Gallagher. Let's start with you, Daniel. What are some of the current challenges in the Marine insurance space. 

Daniel M.: [00:01:22] Good thinking Danny. It's a period of significant change from an insurer perspective. We probably spent the last four years really going through a hardening of the market, going through, I guess, a period of re underwriting. In some instances, we've seen capacity leaving the market. So in terms of availability of cover for customers and changes in appetite from insurers as well. So from an insurer perspective, there's been quite a bit of change. And at the same time, obviously with supply chain challenges, our customers are facing a lot of changes as well in terms of how they how they distribute their goods to their customers both within Australia and globally. And at the same time, there's a lot of investment in digitization, a lot of investment in technology, a lot of investment. We're seeing larger and larger vessels. We're seeing great accumulations, We've seen challenges in terms of attaining and getting access to vessels or having access to containers to ship goods overseas. So I mean, it's the challenge is managing that change and making sure from at least from my perspective, making sure we have products available that suit customer's needs and making sure we really understand how our customer's risks are changing and how we can support them appropriately as they go through that change. 

Danny: [00:02:44] And Kurt, also at NTI, you're seeing shifts in the logistics model. 

Kurt: [00:02:49] Yeah. Thanks, Danny. Yeah, we we definitely are. There's a lot more e-business and a lot more parcel deliveries happening now with the the Amazons of the world being out there. And the other changes that come with that shift in the traditional logistics model is the accumulation of cargo where it's actually sitting. When is it deemed to have ceased its transit? Obviously, we've got costs, inflation and freight rates and spendings of customers increasing as well. And I think a big challenge for the marine insurance sector is how to correctly find and report that information in underwriting. 

Danny: [00:03:33] And Veenet, at Munich Re. You're saying transparency challenges. 

Veenet: [00:03:36] Yes you're right. Thanks. So as Kurt have already outlined, in general, there is a transparency due to the supply chain issues right now from a European perspective, of course, the crisis has an influence, both crisis, the energy, as well as the conflict between Russia and Ukraine. And from my point of view, that dysfunctional supply chain will also lead to some challenges on the insurance side. As Kurt just outlined, especially on the accumulation side, which is the biggest pain on our side as us as a reinsurer. 

Danny: [00:04:19] And Mark, just to get the broker perspective, you're still seeing COVID 19 is an issue. 

Mark: [00:04:25] Yes. Thanks, Danny. We saw COVID 19 has really dampened global trade and reshaped supply chains, potentially creating new risks and large accumulation for the cargo market. The macro environment affected global supply chains, disrupting manufacturing output and causing delays in cargo transit. Longer term moves to improve business resiliency could see companies hold more stock in storage and warehouses. And this might prove challenging for insurers, where accumulation of cargo exposures are already a key driver for losses. 

Danny: [00:05:00] And Mark, let's stick with you and look at how technology is dealing with these challenges. Can you tell us about how digitalization is dealing with it so far? 

Mark: [00:05:09] Yeah, certainly. We think it will alter the way Marine players conduct their business. Radically really reshaping the insurance business model. Our operation involves marine brokers where the term digital could mean many things in the marine sector and as being deployed new technologies like AI, deep learning and blockchain, or some of the buzzwords that we're seeing going around at the moment. However, we don't see these being buzzwords for for very long. We think these technologies are really going to come to the fore shortly and it will include some wearable technologies and augmented reality. And we're going to see these technologies being utilized more and more in claims services and insurance afterwards. 

Danny: [00:05:57] And Kurt, you've been noticing some real time supply chain monitoring technology coming to the fore. 

Kurt: [00:06:03] Yeah, it's it's very interesting in that the benefits in real time supply chain visibility aren't necessarily coming from the marine insurance market. It's actually coming from the logistics operators and companies themselves. So with things like real time data, loggers for temperature, humidity, geo location, opportunities for containers and project cargo around the world, it really gives us more transparency and more an accurate view of what's happening and where the risks are falling. 

Danny: [00:06:36] Daniel For you, it's digital, which is helping you to connect a bit better with customers. 

Daniel M.: [00:06:41] Absolutely. We appreciate that. And particularly in the cargo space, it's a high volume, low average value insurance product and it can be highly administratively intense. So getting accurate information from our customers and understanding their risk and really helping them, as we said, helping them to have appropriate cover and protection. And it can take quite some time. So there's a lot of investment in technologies the guys have talked about in terms of trackers and loggers and some of the container sensors and other things that are going on. And we're looking at how we can connect with that information and reduce reduce the effort from our customers to actually have to give us information. And it helps us help them, help them define themselves to us. I suppose it really helps helps us to understand the risk and make sure there's an appropriate product available for them. And one of the things that's going on, I know everybody's everybody's talked about or talking about inflation, and as we're seeing inflation, you know, there's a potential people are looking at holding more stock through the supply chain issues. You know, there's an issue in getting things to and from location. So they're up increasing their volume of stock that they're holding. But inflation might mean that there's less buyers for the stock. So they've they've changed their supply chain and now they're trying to find buyers and trying to find a way to move that stock again. And that's quite a swift change. So making sure there's a product available, making sure we understand their exposures and they're appropriately covered. It's very hard for customers to keep updating us on those sorts of changes. So the potential is there for us to connect technology to our systems and understand the risks that our customers are facing is enormous and we're looking at how we can continue to invest in that space to make sure that we look after our customers going forward. 

Danny: [00:08:36] And. Veenet, let's not forget about you. What's your take on the technology that's helping with these challenges? 

Veenet: [00:08:42] I think the good thing is that people are, especially in the insurance industry, are starting to learn about first thinking about their pain and where technology actually can help. Not just doing things for the sake of technology. And from my point of view, the biggest value that technology brings is the insights to assess risks better in the future. Yes, it will help to react in real time. It will help to monitor in real time the exposures. But in general, we as underwriters want to be sure that we take the right risk on and. I'm convinced that in a couple of years time, maybe more than a few, there will be a good infrastructure and a good database as well as a good access to other information sources that will help us take better decisions and bring much more profitability into the insurance business, but most importantly to our clients businesses. 

Danny: [00:09:54] Despite the technology improvements that you've all been been noting just a couple of years ago. Marine Judge, the shipping claims company found that 44% of managers involved in maritime insurance claims say the biggest challenge they deal with is the claims process taking too long. What's being done about that specifically and how do those problems look today? Daniel, let's start with you on that. I don't know that. 

Daniel M.: [00:10:19] There's significant improvement today. I think there's certainly steps being taken and again, things like container sensors and the ability to see in very, very granular detail what's going on with a particular shipment and understand what the goods, what process the goods have gone through during transit and really identify whether a loss occurred during transit. Is is the potential is there and steps are being taken and as I said before, to connect those sensors to our systems and be able to understand a lot, a lot better and a lot faster what's really going on. And perhaps one of the areas we insure goods moving around the world. So we will have, say, a claims agent in another country. The goods go from Australia to Argentina or somewhere else in the world. Say you've got a claims agent in that country who has to understand what the goods are covered for and who the insurer was and how they're going to deal with the particular loss and then get the agreement from the insurer. In a lot of cases to settle that loss to our customers. Customer So you have a bit of a chain to go through. And with technology, it's always speeding up. You think 30 years ago there was no email, so things would have to be sent by fax and by letter. And we can communicate a lot faster these days. But I think there's still an enormous potential to automate a lot more through the claims process, and particularly for smaller losses, and also to have a greater understanding ourselves of what's gone on and be able to provide faster responses. Or even if we have that connection to, say, a container sensor be able to tell an insured or their customer that something has happened before they even know about it, before it arrives at its location and they open the doors to a container. We can say, Well, we have the container sensor information and we can see that something's gone wrong. Here's how we suggest you manage it, or say it's a shipment of meat and we can it's meant to be frozen and we can see that it's gone to 30 degrees because it's going through a very hot part of the world. You can say, well, it's not working properly. Best that you send another shipment straight away. This is a total loss. We know it's not going to be any good when it arrives. So we'll settle the claim as quickly as we possibly can and get our customer supplying their customers even quicker. So I think we're just at the beginning of that journey in the claims space and that that connectivity, the information, it's really starting to be built up and the potential for us to really speed up that process and communication is key is as with most things, and we just have to build the connections and work with our customers to provide that support. 

Danny: [00:13:03] Mark, what's your perception as a broker on on this, this issue of claims and how slow they are on shipments of meat and other things? 

Mark: [00:13:11] Yeah, we always working to improve turnaround times. We work with surveyors, loss adjusters, optimize certain technologies, and some examples will include two way virtual collaboration, end to end management tools and digital quoting, or some of the onsite tools that can enhance that process. We focus our claims approach on the quickest claims process for our clients, and the best way to do that is to connect them directly with the insurers where possible. And the claims advocacy that we provide, that we utilize our knowledge, expertise to argue for our clients and to move the claim as long as as fast as possible. Virtual collaboration tools do give flexibility to overcome a lot of these challenges with managing claims and ensuring the best outcome regardless of the claims, volume, location or damage type. So the technology is certainly heading in the right direction to enhance the process and provide a better service and customer experience. 

Danny: [00:14:11] Let's stick with the technology issue and talk a bit more about innovations in this marine technology, cargo and logistics space. Veenet, let's start with you. What are you seeing in terms of innovations here? 

Veenet: [00:14:23] I think couple of innovations. A couple of improvements were already mentioned with the data loggers census and to create transparency and help monitoring. But for me, this has from my own experience, from product development stuff that we've executed, has limited value. If we don't marry this information on the temperature side, on the humidity side with the actual risk information. So from my point of view, the most important innovation and improvement has to be done on the distribution side to generate structured information and databases to actually be able to understand what cargo is going where, from, where at what time and what sensor what's what's piece of technology is accompanying that piece of cargo to be able to understand where does the information come from, how is the information to be interpreted and what? What actions do we take from that? Based on that information, and I think here the distribution side, the digital distribution side and maybe the on demand distribution side for cargo insurance is one of the key aspects from my point of view, going down the next couple of years. 

Danny: [00:15:49] And Kurt, one of the innovations you're noticing is real time product tracking. 

Kurt: [00:15:53] Yeah, I might as well stick with that. I've mentioned it twice before, so I'll keep going. Look, it's the innovation on top of that, though, Danny, It's, you know, product trackers have been there for a while now. It's the real time uptake and the data analysis that goes in behind it. So there are companies out there now that are building dashboards behind these data loggers that you can then see, compare and understand what's going where from your perspective, it's not as available within the marine insurance industry as I would like to hope it would be. But at this point, the big innovation is the fact of the real time, but also the availability of it. You know, there's a global drive for visibility when it comes to anything purchasing wise from whether you watch your pizza be delivered between the store and your house or up until when I was speaking to someone last week who just bought a BMW. They were calling the dealership and saying, you know, where is it at? Where can I get to? And the comment was, how great would it be if there was a little link you could click and see where where it was at. You know, today the wheels went on, you know, went on the vessel tomorrow, all that sort of stuff. So the innovations for the cargo side of the business, it's really the uptake of all of this. So whether it's 3G or low-Earth orbit satellites, it's that uptake in that data that's coming down and what these companies are doing with it afterwards. 

Danny: [00:17:28] Well, let's move on to the role of brokers and how that's changing. Mark, you're a broker. What changes are you seeing there? 

Mark: [00:17:36] Yeah, look, in the broking market, we still think relationships matter a lot. So you still need the personal touch. Brokers also need to get more efficient in every part of the cycle and from identifying prospects all the way through to renewing policies. And there's a lot of excess expense in the chain, and we all know that. And brokers will have to figure out how to take non value added time and effort out of the transaction. This can be done by getting into position where we take advantage of all the data that's available to us using the new technologies and mixing that with our consultative services and take the role of overarching problem solver for our clients. The role of the brokers are changing as technology increases our capabilities to better respond to the needs and heightened risks which our clients are facing and the market fluctuations which are affecting some insurers. 

Danny: [00:18:33] Daniel on the insurer and how do you see the role of brokers changing. 

Daniel M.: [00:18:37] Brokers still incredibly important in the insurance transaction, particularly in the logistics space? To me, there's there's that the information, the digitization, the connections to customers are becoming more and more important and the ability to understand and understand the complexity of a customer and the complexity of global supply chains and be able to interpret what the insurer needs from the insured to provide them with an accurate product, and also then interpret what the insurer needs back to the insurer and make sure that there's a complete understanding of the customer's exposures and throughout the supply chain, and also potentially understand what might be available if there's an ability to to work together to provide a non-standard product. I think the recent supply chain issues have highlighted some of the fragility that comes into the global supply chain and the huge interconnectivity globally amongst different countries. And the globalization of trade is is obviously a key part of global economies today, and that's only going to become greater. And I think that creates complexity in some insureds operations and it requires somebody to be very close to that customer, to be able to articulate what they need and what they can get from the insurance space to make sure that they're properly protected. And that's really comes down to the insurance broker. And so we're seeing a greater engagement in the customer's details from a from a supply chain and the customer's complexity and a greater engagement in new technologies and looking at ways that we can all share data to make sure really the end result. For all of us is that the customer is fully protected and there are no surprises when something does go wrong that everybody knows how the response or knows what the response will be and how everybody responds and who's responsible for what. To make sure that the customer is properly protected and able to get back on their feet as quickly as possible or replace shipments or continue to serve their customers appropriately and as they need. 

Danny: [00:20:55] Let's wrap up our discussion by trying to look into the future. Kurt, let's start with you. Can you paint a picture of how you see this space in a few years time? 

Kurt: [00:21:05] I'd like to go out on a limb here a little bit and say that I think where the marine insurance space uses technology. I think it will form along along the lines of collaboration and proactive partnerships with brokers and customers. I think we'll find at the moment insurers do insurance well. And whenever you know, when everyone's doing the same thing, what are you doing to be different? So the proactive insurers out there now are out there actively trying to prove that they're they're worthwhile partners in their customers and brokers business. So from there, once you have that proof that this is a partnership and it's not just there to take up all of your data and information, I think you'll find proactive partnerships with technology where customers will actively say, I will give you access to this shipment data on this dashboard because it will help your underwriters, but it will also help in claims and data analysis in actuarial, and it'll really become that proactive. And those customers that work alongside the brokers and the brokers that work alongside the insurers will really see benefits down the line. And Veenet turning to you. You actually don't see a huge amount of change in the next few years. 

Veenet: [00:22:24] Not too many changes that are very visible to to the end customer, actually. What I'm convinced of is that that there will be a lot of groundwork being done on the infrastructure side. As Kurt just outlined, we will, in some more years time, have a very good collaboration between all the stakeholders, including insurance. But for that we need an infrastructure. We need to have the connections. We need to be able as an insurer to take on the data that is being provided by logistics, by brokers, by the clients themselves. And we need to have the infrastructure for that, to take on the data, to analyze the data, to visualize the data, to store the data, and then take actions based on that information and the insight. So from my point of view and looking back the last couple of years, where I have been working in that very field very strongly, I do see that that COVID, as well as the recent crisis in the world, have pushed the logistics industry as well as the insurance industry to become more digital. But this is very necessary groundwork that is being done, and I'm sure that this will go forward and will be will be done very well over the next couple of years. And we will have by the end of the decade a very good infrastructure and and very well working products that basically bring a much better experience to clients, but also the underwriters and claims handlers. 

Danny: [00:24:00] And Mark, Veenet just mentioned COVID. You do actually see as well ongoing implications of COVID-19 in the next few years. 

Mark: [00:24:07] Yes, I think the Australian maritime industry needs to be better prepared for the growing number of emerging risks. Some of those will include climate change as well, and companies must work with their insurance brokers to better understand these emerging risks. And I think that's where the role of the specialist marine insurance broker will be indispensable. And to companies that are looking to adapt and survive and managing the impact of climate change will include identifying key risks that climate change poses, such as rising sea levels. The frequency of extreme weather events will all have a significant impact on the operation and growth of the Australian shipping industry. We see regulation as well coming to the fore with ESG around emissions control and chip design. We think this will add operational and administration costs to businesses. And then you might also even have melting ice caps or something to that effect, which changes shipping routes where some become inaccessible and other shipping routes open up. And then I think that's just the tip of the iceberg. 

Danny: [00:25:14] And, Daniel, when you look to the future, you're thinking more in terms of changing products. 

Daniel M.: [00:25:19] Yeah, I see significant potential and Veenet talked about transparency before and. Some of the technologies give us the ability to have a greater level of understanding of the risk itself. And that gives us a potential to create products that are very specific to a customer's needs. In the current cargo products, for example, from the time goods leave a certain point to the time they arrive for a specific set of conditions. Say all risks. So essentially it's a very broad brush, very general cover that just says if they arrive in a different state to the way that they left, there's a chance we're going to pay a claim. But then there are exclusions of various other things in place. So there's potential for and there's already talk in the market and the products already exist in various forms for, say, parametric covers. So it's not a risk transfer, it's not an all risks cover. It's based on a set of conditions and perhaps it's safe for a meat product if if the container shifts in a by a certain temperature, if the temperature in the container rises over a certain for a certain period of time, over a certain level, then our policy will pay a reduction in shelf life, for example. Or and if certain criteria are met, there's an agreed response from the insurance product, which isn't necessarily the total loss of of the product. It's certain value that's agreed in the contract based on a set of criteria being missed. So from that level to simply bringing back and there used to be a lot more of a pay as you go pay as you trade product within cargo insurance, which monthly declarations of your shipments. So helping customers manage and manage their panels. So instead of paying an upfront premium based on an expected expected turnover for the year, paying as you go, that's a very intense, a very administrative intense process to be able to manage that. But with technology and connections to a customer system, you can have an agreed rate and every time a shipment leaves, systems just connect and our system will tell the insured or the insured will tell our system that something has taken place and we can just send them a bill without having to collate Excel spreadsheets and do all these things that took this sort of pay as you go product out of the market. So that's that's a simple change. And the potential for, say, parametric insurances is quite a complex one and there needs a lot of new connections and a lot of new information. And there are definitely products in between that can be very specific to a customer's needs based on a much more detailed understanding of the exposure that their goods are facing and the process that particular shipment goes through and the ability to turn on and off insurances as you need them. And there's a really interesting and complex insurance world out there that technology helps us manage that. I think we're going to see a lot more interest in and conversation about and products really being available in the market in the next decade. Potentially. We'll look quite different to what we see today. 

Danny: [00:28:33] Gentlemen, thanks very much for your insights. We'll end our virtual roundtable there. We've been talking with Kurt Herron and Daniel Morrison from NTI, Veenet Muthraja from Munich Re and Mark Rudman, national head of Marine at Gallagher. You've been watching Insurance Business TV bye for now.