Blockchain for marine pricing
Using live data from ship and cargo movements, insurers and reinsurers will be able to price and select the marine risk they want to underwrite more accurately, EY executives told Monte Carlo Today.
In collaboration with Maersk, Willis Towers Watson, XL Catlin, and MS Amlin, EY launched Insurwave, a blockchain-enabled platform for marine insurance, in May 2018. It is expected to facilitate more than half a million automated ledger transactions and help manage risk for more than 1,000 commercial vessels in the first year.
The distributed network allows exposure and claims data to be shared from the source throughout every party in the value chain, Ian Meadows, director of Insurwave, explained.
The platform captures the data on an individual ship which will serve as the basis for the contract terms, he said. “It should result in better quality data, better results, more accurate pricing and a better service proposition for clients.”
In June, Willis Towers Watson completed the first blockchain marine transaction on the platform. The technology allows for automated responses to risk changes based on smart contract rules based on instant data fed into the platform.
In the past, the limitations of how to understand the risk resulted in its being assessed via a minimum deposit basis, EY partner Simon Burtwell said.
For a logistics giant such as Maersk, the number of ships it operates varies, and insurers previously wouldn’t have had up-to-the-minute data to be able to accurately price the risk, as they wouldn’t know where the ships were, how many were at sea, how many in port, how many were in hazardous locations, or how many faced maintenance challenges, Burtwell added.
Maersk has this data on each individual ship showing its position in real time and, based on the more granular information, insurers may decide to cover only certain ships at some point, and ask for different terms and conditions for others, he explained.
When a loss occurs, it won’t take six months to prove which ships had cover. “With this system, they have the data instantly,” he concluded.