Marsh is set to apply dynamic data analysis of shipowner behaviour to protection and indemnity insurance broking in a bid to reduce claims — but the move is in sharp contrast to the strategy of JLT, which it is currently in the process of taking over.
The marine industry’s largest P&I broker introduced the strategy after signing a deal with telematics data provider Concirrus, which uses live vessel trading data and historic claims records to better inform underwriters in analysing risk.
Until recently, the strategy has largely been deployed in the more commodotised hull and machinery market, but Marsh has now made its strongest move to date to apply it to P&I cover.
Loss prevention
Marsh is seeking to combine analysis of vessels’ behavioural data to improve shipowners' risk rating through loss prevention, and encourage more appropriate pricing and conditions by matching an owner with the most appropriate P&I insurer.
Marsh global marine practice chairman Marcus Baker said: “We are looking beyond a transactional approach and more toward advocacy in how we engage with the client and a lot of that has to do with data.”
Recently appointed head of P&I Richard Adler formerly worked as a shipowner’s representative and his knowledge of the technical side of the business is now being deployed in advancing the loss prevention initiative.
He described Marsh's approach as “technology enabled loss prevention”.
Adler said: “Just using static data is not enough. We have to back up our decisions by hard dynamic data. We are now also looking at an owner’s claims data more closely to match the owner with the right club.”
One key issue for the P&I sector is that the 13 members of the International Group of Protection & Indemnity Clubs do not currently share claims data, which could be used to help improve maritime safety.
Not only could Marsh’s dynamic data initiative help develop a model of how a more comprehensive industry overview could reduce the volume of claims but, in turn, could also help clubs maintain premiums at lower levels at a time the market appears to hardening.
Marsh P&I head Adler believes that if the industry fails to share such data, premiums can only move in one direction.
“We are at a moment of time when the underlying sentiment is changing and there will be a return to general increases,” Adler forecast.
Question of compatibility
However, industry sources suggest that Marsh’s approach contrasts distinctly with that of acquisition target JLT and raises questions over whether the two brokerages will be compatible once the acquisition is completed.
While Marsh is putting an emphasis on helping owners to improve behavioural performance with the aim that it will be reflected in underwriting, JLT’s emphasis is on the cost efficiency of individual clubs, calculated through its internet technology-driven JLT ratings engine.
Rather than looking at how to mitigate raising rates, as Marsh is doing, JLT starts from the premise that clubs are overcapitalised and have more scope than they are admitting to reduce premiums even at a time of soft P&I rates, lowering investment returns and increasing claims.
Baker was unable to comment while the merger is still awaiting final approval.
Adopting technology
However, he did go as far as to say that Marsh and JLT are “two incredible businesses that are trying to move P&I on through technology”.
On whether the two differing approaches are compatible, he said: “We will look at it once the deal has gone through.”
With Baker set to be appointed head of global marine at the newly formed Marsh JLT Specialty, the general view is that Marsh’s approach will become the main strategy following the acquisition, but that JLT’s rating engine could still play a big part in the overall approach.
However, there is some scepticism in the market over whether the differing approaches can be successfully married.
The two companies are currently unable negotiate the details of the merger between themselves ahead of competition authority approval.
