August 27, 2018 by Greg Meckbach
Some insurers are considering how artificial intelligence could help underwrite marine risks.
Although big data has been around for years, “what has changed with AI is just using bigger more disparate data sets which go across different domains – for example using social media, using weather data, using all kinds of other data,” said Aditya Kaul, lead analyst for research firm Tractica, in a recent interview.
A tech vendor in the AI space may offer, “for example, for one ship, 1,500 points of data that they would kind of collect and find trends over the course of a year and present that to an underwriter,” added Simon Main, technical director of underwriting at North Protection and Indemnity Club, a British insurer that offers marine insurance – including to Canadian firms on a non-admitted basis.
But AI is not something you could easily turn on and off to underwrite marine risk. “You have to research this thing and look at whether the data that is being provided does make a difference, because it’s replicating the process that an underwriter would do anyway,” Main said Monday in an interview with Canadian Underwriter. “There is an artificial intelligence algorithmic approach that people are taking to analyze all that and try to make the underwriting decisions more accurate or more efficient.”
AI is when computers can “mimic human cognition and activities” such as identifying patterns, making decisions and taking actions, Mark Breading, a partner with Boston-based Strategy Meets Action, wrote in a previously-released paper.
North P&I Club is not currently using AI to underwrite. But using AI to help underwriter marine risk is a “work in progress” in the marine insurance industry, Main suggested. “If people are providing thousands of data points to help [a marine insurer] make [an underwriting decision] decision, you’ve got to track that over time to see if it’s helping you make [a better] decision over the ones you are already making,” said Main. “That’s work in progress, I think, for most of the industry.”
Main made his remarks in an interview about the opening of North P&I’s New York City office. North P&I is based in Newcastle-upon-Tyne, England.
North does not currently plan to become an admitted insurer in Canada, but the opening of the New York office – announced Aug. 22 – was done to “have someone close by to sort of strengthen relationships” with customers and brokers, Main suggested.
“We tend to manage those relationships through travel,” Main said. “So two or three times a year, some of our guys will travel out and meet people in North America and Canada, but I think we just want to deepen that relationship stuff.”