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Recent events such as the COVID-19 pandemic and explosion in
Beirut have underscored the need for marine insurers to develop
better ways to understand their risk exposure at both a macro and
micro level. For events of this magnitude, the impact on industry
participants is significant: the Beirut explosion has caused
$15billion in damage while the impact of COVID-19 will be profound
and long-lasting.
Recognizing their vulnerability to events of this type, marine
insurers are working to improve their ability to anticipate and
quantify the potential impact. As they do so, the importance of
being able to collect, manage and analyze data has become clear.
Insurers recognize the need to apply sophisticated analytics and
artificial intelligence (AI) to draw valuable insights from their
data that go beyond standard pricing and risk assessment. However,
the rapidly increasing volume and variety of data that is now
available to the maritime and insurance industries have made it
challenging to extract the maximum value and the most valuable
insights from the data. For those that have committed to enhancing
their analytics capabilities, there is a growing realization that
the implementation of sound data management processes is a crucial
first step.
New research by industry analysts IDC shows that data
management is now a strategic priority for nearly 40% of insurers,
with areas of focus including data centralization, master data
management (consolidating data from different sources to create a
single version of the truth across the business), and data quality.
These findings are based on a global survey of 125 industry
practitioners (
you can read the full report here).
While better data management practices have the potential to
dramatically enhance resilience, compliance and visibility, many
marine insurers have not historically prioritized these activities.
According to the IDC survey, only one-third of insurers are
actively practicing master data management. This is changing
rapidly as industry participants look to enhance the value of
analytics and become more dynamic and confident in their
decision-making. Many participants are now starting to ask key
questions such as: How reliable is the data we use to make
decisions? How do we manage increasing data volumes and varieties?
And how do we extract the maximum value from our data?
Achieving these ambitions not only provides point-in-time
visibility, but also drives more efficient and accurate forecasting
and response times.
Whether the goal is to underwrite more profitably, reduce risk
exposure or provide best-in-class customer service, industry
participants need to focus on three key capabilities:
1. Data centralization and workflow
automation
Within an organization, data is often siloed in different
systems and spreadsheets that are owned by various user groups. The
abundance of manual processes and data fragmentation typically lead
to inconsistencies and inefficiency when attempting to derive
insights and make decisions. The centralization and automated
linking of multiple datasets provide a more complete, granular
understanding of the external market, your customers, and your
portfolio (e.g. across cargo or hull). This in turn drives
better-informed decision-making.
2. Data quality
Confidence in data is crucial, however many insurers lack
adequate tools to control data quality (a key area of focus in the
IDC white paper), leading to major downstream issues in areas such
as pricing and underwriting, reporting and customer service. For
example, participants may use unnecessary buffers in
decision-making as a consequence of low confidence in data inputs
and the processes surrounding data validation and stewardship.
Whether it is the pricing of an asset, understanding exposure, or
management reporting, the quality, timeliness and transparency of
the data are critical for measured and calculated
decision-making.
3. Master data management
In an industry that draws on so many disparate data sources and
collects them across multiple organizational silos, master data
management is essential. Being able to reconcile data from
different sources and create a single version of the truth across
the business will not only deliver confidence in decision-making
based on consistent, validated and complete data, but will also
support response times, scale and investment in strategic
initiatives that deliver growth.
In a maritime environment characterized by elevated volatility
and new opportunities, continued investment in foundational data
management is imperative for the marine insurance industry. In the
move to leverage new technologies, such as cloud computing,
advanced analytics and data lakes, it is the accuracy, completeness
and granularity of data that will drive maximum business
value—through better risk and exposure management, improving
pricing models, supply chain transparency or customer service and
acquisition. As industry participants seek to simultaneously stay
ahead of industry disruptors and identify more dynamic ways to
drive growth and manage their portfolios, having a robust data
management platform in place will enable them to take full
advantage of new technologies designed to support those goals.
Posted 09 October 2020 by Jamie Penniman, Vice President, Head of Business, EDM at IHS Markit
The Trade Numerologist is IHS Markit's unique weekly look at global trade by award-winning journalist John W. Miller, formerly of the Wall Street Journal, using proprietary numbers from IHS Markit's Global Trade Atlas database, the world's most complete and accurate set of trade numbers.
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