At the Marine Insurance London Conference on July 5th Ami Daniel, CEO of Israel-based Windward, gave a keynote address on “Go Deeper: developing supermodels for marine insurers”. IMN caught up with him afterwards for a chat.
Windward provides marine insurers with risk analytics that enables them to optimize risk selection. Each ship has a comprehensive operational profile generated for it, which Windward says “brings an unprecedented level of depth and accuracy to risk-modelling”. This runs well beyond traditional factors such as ship characteristics and past accidents.
As Daniel noted, operational profiles are not static. Risk factors need to be measured constantly. The metrics used by Windward include how vessels navigate, the water depths in which they operate, how they behave in rough weather, how they are managed and maintained, and how they manoeuvre when they arrive at port.
Q: How do you see and how would you like the marine industry to approach new technology.
Daniel: “I think that technology is a way to get somewhere, rather than a goal in itself. So at the moment everyone is talking about the need for more underwriting discipline, better risk assessment and loss prevention. I think technology enables that, so with the current urgency and momentum in the markets technology is a way to get there.
“I would say as a note of caution that technology by itself is not enough. You need leadership; you need executives to support that, and champions of it. You need ambassadors within organizations. At this point it is more about change transformation, about adoption, about leadership, rather than just being about technology. We are definitely keen and happy to help in the long term, but this is something that we see ourselves doing hand in hand with the market.”
Q So, basically you are saying that technology is an enabler rather than an end in itself. What does it enable?
Daniel: “In our case it is definitely better risk assessment and risk selection. That is the core of what we do. What we bring to the market is the ability to predict risks, to use risk analytics to improve risk selection, to set up a growth strategy for a company and to apply portfolio steering. That is the core of what we do.”
Windward’s Portfolio Steering predicts high and low-risk fleets to maximize portfolio strategy with its decision support system, enabling insurers to understand the segments with the highest probable risk, to predict the most profitable segments in a portfolio and to refine a portfolio mix to minimize accumulated risk.
Q: In the industry, where do you find barriers that are hard to overcome?
Daniel: “You are at Insurance Marine News, so you are an agent for change right? You bring information across and you are democratizing information by doing that. And this inaugural Marine Insurance London conference is also leading to openness and innovation. I’ve heard a lot more people today who are here to speak about it. That was something they weren’t doing a year ago, two years, ago, so in that sense we are much more open now.”
Elliott Gotkine, Windward director of communications, observed at this point that “you can see that half of the panels here today are talking in some way about technology and what it can do for insurers’ costs and underwriting efficiency”.
Q: Where are you focusing your risks at the moment? Traditional risks where the data is available, or the “known unknowns” such as cyber, where there isn’t a great deal of data available?
Daniel: “At the moment we think there is a lot of potential within the known risk sector, which is a $30bn industry with effectively no meaningful companies providing models of risk assessment on a global scale. If you compare the expenditure of the marine insurance industry on predictive analytics in terms of a percentage of the premium, or the level of sophistication, you would see that it is not that high.
“I would say that even the property & casualty markets, and cyber markets have in only the past couple of years adopted machine learning and predictive abilities to assess risk, so in that sense I don’t think that marine insurance is as behind as people think.
“Insurance as a whole is challenging. That’s why we love it and we are passionate about it. We see a huge opportunity. Where other people see difficulties, we see opportunities. The ability to see opportunity, raise capital, bring in investors, hire great people to be passionate about it, bring talent, bring that passion to engage, is a great part of succeeding.’
Q: Are you focusing in particular on the London market now?
Daniel: “We are acting in the continental market as well, which I think has its own characteristics. Right now we are increasing our focus on the London market. We announced this week a big round of funding (Editor’s note, $16.5m in round three funding, including backing from XL’s unit XL Innovate) which allows us to expand in the London market, hire more people, expand our presence.
“For us London is key. It is the centre of underwriting. Lloyd’s of London is still the centre – I would say not only in terms of premium, but also the centre of expertise in terms of market leadership and thought leadership, the journalism. This eco system emanates from Lloyd’s of London and everything around it and that is why we will be tripling our investment in marine insurance.
“We see ourselves expanding beyond hull and machinery into P&I, cargo insurance. There are significant technological challenges and barriers to that. We think that the data platform that we have built, with the right partners, will allow us to build these models. We have already made assessments of complexity. We think it is definitely going to be possible. It’s a definite major step that we are going to do in the next 12 to 18 months, and we welcome partners to work with us on that.
“The second is that we will be partnering with other companies and providers in our eco-system, either with new data streams, or with different types of collaboration.
Thirdly, we definitely want to engage with fellow industry leaders about how and where this is all going. What are the roles of the brokers and the reinsurance brokers and the carriers and the shipowners in where the new systems are going? How does that eco system grow and evolve? These are very exciting times.”
Daniel said that Windward was not limiting itself as to customers. Part of the latest round of funding was to enable the company to engage and grow, to be open to feedback and to what customers want. “To quote Dame Inga Beale, to build our products around the needs of the customers”.
He said that, now Windward has the capital, the will, and also hopefully the position in the market to be doing that, the company would at this point welcome any organizations “that want to take a leadership step and be instrumental on leading that change”.
One of the new employees at the London office in St Katherine’s Dock will be in a senior leadership role. “And that person will definitely drive our plans forward. I don’t hire smart people to tell them what to do. I hire smart people so they can tell me what to do”, concluded Daniel.