Insurwave — a high-tech, cost-efficient marine placement and pricing system — is experiencing a new lease of life on the back of the insurance industry’s move towards smarter products.
It was launched in 2017, with backing from EY and Guardtime. Users of the platform have included AP Moller-Maersk, XL Catlin, MS Amlin and Willis Towers Watson.
The idea was to create a blockchain system that would cut out the long string of intermediaries and painstaking processes involved in placing insurance cover, to reduce costs and the distance between risk and insurance capital.
The initiative promised to cut the premium lost to administrative processes by 50%.
Insurwave has recently been buoyed by £5m ($6.6m) of fresh funding and an expansion of its client base to include other shipping giants such as Teekay Corp.
“We have shown we can also work for other large corporate clients that are not the same scale of Maersk,” Insurwave chief commercial officer Stefan Schrijnen said.
The pandemic lockdown in many of the world’s insurance capitals has forced a lot of brokers and underwriters to look for ways to operate remotely and to embrace digital technology.
Schrijnen said the pandemic has given his company a boost.
“We certainly had a jump-start at the start of lockdown when clients became a bit more open to new operations,” he said. “There was certainly an uptick in the intensity of engagement.”
The latest trend in insurance is all about cutting costs through digitalisation. Lloyd’s of London — the largest single market for marine insurance — last week announced its Blueprint Two project to try to make it more competitive. It seeks to build on the huge shift to automation caused by the pandemic to cut acquisition costs.
Lloyd’s chairman Bruce Carnegie-Brown said: “The pandemic has demonstrated that Lloyd’s can adapt in a fast-changing environment, and this has only increased our hunger to get on and make further change happen.”
Biggest change
But the biggest change in Insurwave’s approach has been to drop the much-hyped blockchain process in favour of a cloud-based service system.
After trying out the ledger technology, Schrijnen said he found it did not fit with what Insurwave is trying to achieve. He said the distributed ledger system data could not be deleted, while multiple duplicate entries by each participant also made it inefficient.
The new system works through a single shared database, via which data can be restricted to the parties that need access.
The result has provided the basis for a live policy, into which risk factors and other variables are incorporated as they occur.
“In a typical insurance product, data from the insured interest is made just a few times a year,” Schrijnen said. “The broker client and insurer might look at it on a quarterly basis. But we are updating five to 50 bits of data whenever the exposure changes.”
Insurwave said the system allows data that might affect the risk to be input at any time. For example, when a ship enters a high-risk area, war risk cover can be triggered. If there is a change in a vessel’s valuation, or the cargo carried, or trade route, that could then alter a vessel’s risk profile. Any number of factors that might change the risk exposure or valuation can be input at any time.
The company said the result is that the insurance parties are better informed about risk and pricing. It added that there are positive efficiency gains across the insurance process for underwriters, who get a more accurate view of the risk, and the insureds, which get more accurate pricing.
Schrijnen admitted that “not everyone wins” in the process.
The Insurwave product is “unashamedly” acting for the insured. But, he said, despite the move towards more automated processes, there will always be a role for the underwriter and broker.
