Marine insurance rides the technology wave

Marine insurance rides the technology wave | Insurance Business

Marine insurance rides the technology wave

Marine insurance is one of the oldest forms of insurance, dating back to ancient times. Today, centuries later, it is still very important – due to the massive movement of goods between countries brought about by globalisation.

With today’s rapid development of digital technology, marine insurance is adapting to the times, evolving to keep up with new advances and addressing new risks that emerge.

According to Simon Stonehouse (pictured), marine insurance committee convenor of the General Insurance Association (GIA) Singapore, technological changes are also impacting the maritime industry, with shipping networks growing more intelligent day by day. While progress is promising, the industry is still in its early days, and there’s much to done to fully reap the benefits that digital transformation can bring.

Read more: Singapore Shipping Association to increase focus on marine insurance

Stonehouse enumerated several key technological changes affecting the maritime industry:

  • Digitalisation of the maritime sector – According to Stonehouse, this will alter the way marine players conduct their business, radically reshaping the insurance business model. “As our client’s operation evolves, we, marine insurers will need to follow suit,” he said. “The term ‘digital’ can mean many things. In the maritime sector, digital technologies are being deployed to improve productivity, connectivity as well as operational efficiencies.”
  • The new generation purchasing insurance – There will come a time where the ones who will purchase marine insurance are digital natives, or people who have never known a world without computers and the internet. This generation expects goods and services to be accessible at all times, which will further drive the demand for marine insurance with fast and around-the-clock access and services.
  • Savings and efficiency – Stonehouse believes that digitalisation brings significant cost- and time-savings, efficiency and product/service quality improvements for maritime businesses. This includes efficiencies in marine underwriting at scale. Digitalisation focused on automation can remove costly human errors.
  • New technologies like AI, deep learning and blockchain – These are revolutionising supply chain logistics and cargo trade in the maritime sector in exciting ways. “Autonomous ships, wearable technologies and augmented reality, while nascent, these terms are growing in significance beyond buzzwords these days,” Stonehouse said. “The industry is looking to increase investments and research into developing innovations that will enhance navigational safety, while also focusing on training and development of future-ready seafarers.”

New risks and challenges in the digital economy
As with any technology, advances in shipping have brought about both conveniences and new risks that insurers must address. Fortunately, the insurance industry can also harness technology to help solve these problems.

“Insurers have an important role to play in addressing the risks associated with innovative technologies, and being at the forefront of change,” Stonehouse said. “Innovation like autonomous shipping is still at its very early stages of research and trial, and will likely take some time, perhaps decades, before it becomes fully operational.”

He added that the main challenge in underwriting risks is the interaction between technical systems and human interaction. These new technologies, especially autonomous systems, must rely on proper industry standards, certification and classification, in order to ensure safe performance out in the sea.

For unmanned vessels, there are concerns such as who should hold command of a vessel, and the need for sufficient manning, training, and proper lookout. According to Stonehouse, these must be integrated into international conventions such as the  International Convention for the Safety of Life at Sea (SOLAS), the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW), and the Convention on the International Regulations for Preventing Collisions at Sea, 1972 (COLREGs).

Regulatory support for marine insurers
Having touched on regulatory frameworks, Stonehouse said that it is important to balance this with supportive laws and regulations that are not overly restrictive, which could end up stifling innovation growth.

“To drive continuous growth, governments like Singapore have been a great partner for the maritime sector,” he said. “There’s a huge focus on growing Singapore as a global maritime hub, and rightfully so, as Singapore’s port is one of the busiest in the world. Singapore’s overriding strategy of growing talent and strengthening connectivity by attracting leading international companies has proven to be fruitful. This has empowered the nation to build an ecosystem of which insurance is fundamental in connecting with the overall community.

Read more: Singapore goes full speed ahead as maritime and marine insurance hub

He mentioned several organisations and initiatives in Singapore, such as the Singapore Maritime Foundation (SMF), which helped develop Singapore as a maritime hub by raising Singapore’s global standing through supporting local and international conferences and providing the backbone to documentary work such as the conception of the Singapore Ship Sale Form. The Maritime and Port Authority of Singapore’s Maritime Innovation & Technology (MINT) Fund and newly launched Maritime Innovation Lab have also driven cross-functional capabilities for the maritime ecosystem in Singapore.

Since shipping is an international activity, efforts to develop marine insurance should also be of international character, and foreign and international organisations are crucial to its success.

“Marine insurance by way of brokers and insurers is a derivative of the success of Singapore’s global maritime hub,” Stonehouse said. “From an insurer perspective, marine is an international regime, and so is marine insurance. Instead of viewing countries like Hong Kong and Shanghai as rivals, we are all part of a worldwide community where we seek to support each other for the common good, such as improving safety standards at sea.

“While Singapore has done a good job in future-proofing the industry in order to remain competitive and world class, with key initiatives like training programmes for insurers and mariners, cross-border collaboration has been pivotal to its success story. This is especially so in the marine insurance sector. To illustrate, Singapore works closely with the Hong Kong Maritime Insurance Association and has a burgeoning relationship with the Shanghai Institute of Marine Insurance. The International Union of Marine Insurance (IUMI) also plays a key role in bringing together all marine insurance associations to strengthen collaboration in protecting maritime businesses.”