Marine on doorstep of digital transformation
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Marine insurance stands at the brink of a revolutionary systemic change – and NTI is leading innovations to leverage the many advantages for brokers and their customers
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GLOBAL SHIPPING and logistics firm Maersk turned heads in 2018 when it introduced blockchain technology to help tailor hull insurance in a more detailed way and encourage mitigation of risk.
The insurance side of the innovation worked by increasing coverage automatically for ships entering high-risk areas such as the Red Sea and reducing coverage when the vessel left the area.
This product was the first major digital solution in marine insurance globally, setting the stage for future innovations in the industry. Fast-forward six years and digital capabilities have grown exponentially, but few marine insurance providers have moved to leverage this ground shift.
Dan Morrison, head of marine portfolio at NTI, sees the promise of that early innovation as on the verge of beginning a significant acceleration with the potential to revolutionise marine insurance. This could provide opportunities to develop and deliver products and services that benefit NTI customers.
Long seen as something of a laggard when it comes to adopting technology, marine insurance could see a new wave of digitalisation that enhances transparency, efficiency and customer satisfaction.
The vehicles, vessels and equipment NTI’s customers rely on have become safer, faster and cleaner. The cargoes they carry are now more delicate and time-sensitive than ever before. With over 50 years’ experience in the insurance industry, NTI has always been successful in finding new ways to keep its customers moving, across the heavy vehicle, mobile plant and equipment, and marine industries. Its combination of tailored products, experienced people, accredited repair and recovery networks and industry advocacy has seen NTI ranked as Australia’s #1 specialist insurance provider. Yet insurance is just a piece of paper, a promise. It’s not until you really need an insurance provider that you understand its point of difference – the NTI Difference.
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Annual global economic impact of adopting fully digital bill of lading system
Benefit attributed to container carriers (excluding direct cost savings)
“This is the most significant period of change from our environment perspective and supply chain disruption [that I have seen], but also from an investment and opportunity perspective”
Dan Morrison,
NTI
overseas destination where the language of business may not be English and there may be multiple legal jurisdictions to get through,” says Morrison.
There are also all the related transactions happening in the background, including banks requiring letters of credit transfer, chambers of commerce preparing documentation, and insurance providers underwriting the safe passage of the goods. A recent McKinsey report stated that documentation for a single shipment can require up to 50 sheets of paper that are exchanged with up to 30 different stakeholders.
It isn’t surprising that sometimes people get their mates’ receipts mixed up with their bills of lading, and shipments end up getting lost somewhere on a sweltering dock in Colombo or Djibouti.
But Morrison sees a plethora of potential for how marine insurance can engage with the changes underway in the world of cargo.
“It’s an exciting time – and I’ve been doing this for 26 years. This is the most significant period of change from our environment perspective and supply chain disruption [that I have seen], but also from an investment and opportunity perspective.”
COVID-19, the war in Ukraine, as well as shipping bottlenecks in the Panama Canal, Red Sea and Suez Canal, have laid bare the need for better supply chain resilience. This helped prompt the UK government into passing a law last year that will allow any of these trade documents to become electronic. The bill has a very wide ripple effect due to the historical weight of English practice around global shipping conventions.
One area starting to transform is digital trade documentation.
Sending cargo around the world generates a mountain of paperwork – certificates of origin, different types of invoices, export declarations, import licences, warehouse receipts, delivery orders, packing lists and customs declarations are just a few of the documents that can be required. There are multiple parties in the chain of possession with a financial or legal interest who might need copies in duplicate or triplicate.
“You’ve got to get some of the documents to a trucking company; you’ve then got to get those documents to the port authority and to the shipping line … then potentially the same documents are needed for similar organisations at an
“It accelerates the potential for change significantly given the importance of English jurisdiction to global shipping,” says Morrison.
Customer expectations have also evolved quickly with the rise of online shopping and the increased ability to track online purchases. Just as consumers have come to expect regular updates on when a home delivery will occur, so players in the cargo business are now more open to equivalent systems for things such as shipping containers.
“Most of the major shipping lines are putting trackers and
monitors into their containers … there is a value and expectation of transparency, and an opportunity from a shipping and logistics perspective to provide customers greater detail and greater understanding of where their goods are and what conditions they are going through.”
Morrison sees this momentum starting to impact marine cargo insurance in a big way.
“There’s a lot of focus on how we digitise, how we standardise, how we facilitate this transparency, and how we use all these technologies to improve access to cargo insurance, be transparent and use those data analytics insights to improve customer experience,” he says.
“Availability and access to data allows us to tailor our offerings to meet our customer needs. We can offer better responsiveness, rates and coverage”
Nick Aiello,
NTI
Given that systems have remained paper-based for so long in shipping and cargo, the upside for digitalising more of the supply chain is large. Nick Aiello, NTI national product manager for cargo and carriers, says that to be able to make sense of the old system, cargo insurance providers opted to make their standards very simple.
“When I say simple, I mean simple,” he says. “We traditionally had to ask lots of questions and simplify information to capture it, because we just didn’t have the processes to handle it. That was the most efficient way of providing that aspect of customer service, which just meant that customers received an average outcome in terms of coverage and premiums.”
Coverage tends to be general in nature and sometimes can't take into account when supply chains go awry.
“Connecting into this new world gives us the opportunity to improve that and help people acquire the right cargo insurance coverage to make sure they’re fully protected,” says Morrison.
“Perhaps if we can connect to these trackers, and monitors and container sensors and things, we might even be able to feed back to the customer.”
This would make marine insurance more interactive, with insurance providers able to offer updates to policy cover if a container moved through the supply chain in a way that wasn’t initially foreseen.
“In the future if we can get live, or at least regular updates from trackers, the data could allow us to review an insured's supply chain to make sure that the insured is fully protected.”
Monitors could also help insurance providers save time if an incident is likely to lead to a loss occurred, such as a container full of TVs being dropped or a meat shipment overheating. Knowing that these incidents have occurred before the container is opened at its final destination can allow the insurance provider to start processes early, saving time in reaching a solution and enabling the customer to arrange replacement goods more quickly. Other examples might be fire, theft or natural catastrophe.
“We can speed all [those processes] up, and we can help our customers service their customers better,” says Morrison.
This evolution of the freight task in Australia challenges the way traditional cargo insurance policies respond to this segment of the market. Standard deductibles usually exceed the average shipment value of goods sold online, and the administrative load created by the high volume of e-commerce shipments requires a high level of automation to efficiently manage claims.
The demand for efficient, transparent logistics has never been higher. NTI stands out as a provider of connected insurance products in the e-commerce sector, integrating insurance solutions directly into platforms like Shopify through its new Merchant Delivery Insurance product.
“It’s an always-on embedded transit insurance solution that captures real-time declarations as goods are ordered and fulfilled – saving the insureds, brokers and our time in administrating the policy,” says Aiello.
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Transforming global logistics with technology
Rise of e-commerce and connected supply chains in Australia
Published 16 Jul 2024
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US$1.5–2.1bn
Direct cost savings for all stakeholders involved (digitalised and automated processes)
US$6.5bn
Ecosystem unlock (reduced inventory and financing costs for cargo owners and unlock of new business models)
US$6.9bn
Trade enablement (reduced trade friction, especially for emerging markets)
US$30–40bn
Total ecosystem impact
US$44.9–55.5bn
Source: McKinsey
Australian households made an online purchase in 2023
Online shopping in Australia: Fun facts
Source: Australia Post 2024 Inside Australian Online Shopping report
of Australian households made a purchase 12 or more times in 2023
of Australian households made a purchase 26 or more times in 2023
Implications of better data for better insurance
In Australia, the rise of e-commerce has further underscored the need for connected supply chains.
While the pandemic supercharged online shopping, the post-pandemic era is seeing a stabilisation as fundamental shifts in the way we live, work and shop become socially established. According to Australia Post, 9.5 million households in Australia made an online purchase in 2023, representing roughly eight in 10 households. On average, 5.6 million households shopped online every month. Some estimates project online shopping in Australia will grow at least another 40% by 2029.
“Using the data from that direct plug-in with the merchant has allowed us to really make the whole claims process extremely streamlined and extremely efficient. It’s embedded so [that vendors] don’t have to handle back-and-forth with the end customer calling up or emailing through and saying, ‘Hey, where’s my goods?’ We handle the end customer’s lost, stolen and damaged-goods enquiries, which frees up the merchants so that they can focus on growth.”
Rather than just providing a cash settlement, NTI can also organise resupply directly from the merchant’s inventory, treating it like another sale so that the merchant maintains their relationship with the end customer.
“We handle the area of our expertise, which is dealing with logistics companies and the settling of the claims,” says Aiello.
As the industry evolves, NTI is leveraging technology to deliver superior products and services to its customers, and leading other stakeholders in the marine ecosystem to explore the possibilities for better ways of doing business that are now tantalisingly close.
“As insurance providers and brokers, we must engage with our customers and industry early, partnering to provide holistic risk solutions to create safer and more efficient outcomes for today and tomorrow,” Aiello says.
By continuously investing in technology and fostering a culture of collaboration, NTI can both guide and navigate the future of marine insurance, thereby ensuring that customers and brokers alike don’t get left behind.
Leading the way with continuous innovation
Right across the spectrum of cargo, from the low average value in e-commerce to high-value containers of large commercial customers, having useful data at their fingertips can help insurance providers respond faster.
“We can manage claims a lot quicker because we’re not asking, ‘What is it? Where is it? What happened?’ We already have all of that information,” says Morrison.
Better data and more of it will lead to more robust risk management practices and possibly reduced insurance costs as a result.
“From a risk management and risk improvement perspective, more detailed data so we can monitor and see more means we can help customers improve processes,” Morrison says. “And all that feeds back to managing insurance costs. We can reduce claims, and we can help bring insurance pricing down, potentially.”
Aiello sees related opportunities around transparency due to the availability of data.
“Availability and access to data allows us to tailor our offerings to meet our customer needs. We can offer better responsiveness, rates and coverage,” he says. “We can see a lot of the data points, and we can actually connect better with shipping lines or carriers or freight forwarders to find out what’s going on, where things are, and keep our customers informed far better.”
The economic benefits of unlocking the opportunities for marine insurance will be enormous. The global impact of an electronic bill of lading system alone is estimated to be US$50 billion annually, with the marine insurance sector standing to win a share of a US$6.5 billion dividend deriving from such a change, according to McKinsey.
Better, faster data can lead to reduced costs
NTI, as a company more weighted towards marine insurance than larger generalist insurance providers, is in a leading position to help galvanise momentum to better leverage data and technology in marine – and has plans to continue to innovate in the area.
“The trackers already exist, but we’ve got to ingest that data, we’ve got to use it for something, and we’ve got to feed back to the insurance side. Investment in the building of such facilities to use it is also something that we’ve got to start to investigate,” says Morrison.
NTI also has a corporate culture willing to tackle such a monumental task.
“We’re lucky to have both our culture and the structure that we’ve got,” says Aiello. “Our teams are extremely closely linked, and we’ve got a great culture of collaboration.
“Our supply chain team works very closely with the industry and understands what the pain points are, for both our customers and the broader logistics industry. We can’t sit back and just wait for things to happen,” says Aiello.
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