When the TT Club celebrated its 50th anniversary in June this year, it decided to look ahead to what the future might hold for the boxship industry.
To do so, the container shipping logistics insurer commissioned US management consultancy McKinsey & Co to forecast how the industry might look in 2043.
The study found the industry would continue to consolidate; and diversify into ship operation, cargo handling, freight forwarding, and ports and terminals.
Amazon effect
That online retail companies, such as Amazon, could spread their businesses into every link of a logistics chain.
And that automation and digitalisation would play ever greater roles in an increasingly data-driven business.
The report left TT Club chief executive Charles Fenton pondering a tricky question: would the fragmented lines of traditional marine liability insurance be relevant in a new era where the main operators' businesses were integrated?
As long as it makes sense, there is no barrier for us, we are there to provide value to members
Charles Fenton
Embracing change
For Fenton, the answer is clear. Logistics cover providers will have to respond to change and adapt, and that the TT Club, as a diverse logistics cover provider, is well positioned and open to doing so.
“We would have no problem philosophically at this stage in saying: ‘Well, you have to cover risks across a business that is now joined up, so we will join our cover up in a way that makes sense to you’.
“We have not had a lot of requests for it yet but we have no internal barriers here. I think some insurers are more siloed.
"As long as it makes sense, there is no barrier for us, we are there to provide value to members.”
Responding to McKinsey's findings, the TT Club is already making some of its insurance processes more automated and digitised.
But, according to Fenton, the company's biggest advantage in the changing market is data.
Big data
TT Club has perhaps the biggest book of specialist logistics cover in the industry, and as such has more data on the business than its competitors.
Fenton believes that this data will be the key to providing better informed underwriting and loss prevention.
“We will apply technology wherever we can, whether that is in credit control process, or in claims,” he said.“But we don’t pretend that will change our world, that sort of stuff is just good housekeeping.
"The really clever thing we can do is analyse the data together with third-party sources and we’re already making some progress on that.
"It is potentially quite interesting if we can suddenly give underwriters another level of information that they can then add to what they already know.”
So how is the McKinsey study shaping TT Club's strategy?
Undoubtedly things will look different in 10 to 15 years' time but there is no reason why organisations like us can’t keep up and do what is best for our members
Charles Fenton
Fenton said McKinsey had suggested that digital technology could be more easily applied to the TT Club's retail insurance lines than its speciality cover.
Driving profits
“When we talked to McKinsey, what they were keen to say is that investment goes into where the returns are. So it is retail insurance that has had the investment and is where the robotics are being applied.
"But it will take a long time for a technology company to get round to, say, the IG [International Group of P&I Clubs] ... because there is not much of a business in that,” Fenton said.
“Liability cover is judgement-based, so who is going to invest the time and money to teach a robot how to underwrite a port and terminal?"
"We would say we are interested in the opportunities but we don’t see a massive threat to jobs, because this will come over a few years as organisations take shape.”
Fenton said he does not think technology will affect senior levels of the underwriting or claims segments.
“I find it inconceivable that people with knowledge are not going to talk to other people with knowledge,” he said.
Mining data
“But what I suspect is that both will be backed up by data and analysis that has been artificially mined.”
Fenton believes the report has made it much clearer for the TT Club to identify how it can keep up with market trends and keep pace with the giants of the industry.
“The headlines are always about how transformational this is and how quickly the world is going to change.
"Undoubtedly things will look different in 10 to 15 years' time but there is no reason why organisations like us can’t keep up and do what is best for our members,” he said.
