Leveraging the opportunities inherent in sensor technology and IoT, the Norwegian insurer DNK is changing the marine war risk insurance game, according to Ronny Reppe, CEO Noria Insurance Software.
He noted that war, terrorism and piracy were significant threats for the shipping and offshore industry. “With the resurgence of late 2000s maritime piracy fresh in mind, we’ve seen an increased focus on war risk insurance – insurance providing cover against war and marine terrorism hazards usually excluded from regular marine policies”, said Reppe.
To combat this, ship owners regularly purchased separate war risk covers specifically to cover piracy attacks. The Norwegian Shipowner’s Mutual War Risks Insurance Association (DNK) is Norway’s leading marine war risk insurance provider, with insured values of almost $200bn, Reppe said.
Ship-owners with vessels travelling to or through certain high-risk territories, such as Libya, Yemen or the Indian Ocean, increasingly purchase war risk insurance to cover themselves from piracy or war-related perils. When a ship journeys into a war risk zone ships usually report their position and notify ship owner headquarters. previously this has been done manually, but DNK has automated this process through the use of sensor technology and the Internet of Things (IoT).
Teaming up with Clearwater and Noria, DNK has automated the insurance process for ships travelling into high-risk or war zones. As soon as a ship enters a particular zone, the traditional insurance for ocean-going ships is liquidated, and the war cover automatically comes into operation.
This is done with the help of tracking equipment Raptor, installed throughout their member organisations’ fleets. Raptor transmits the ship’s position to Clearwater every couple of minutes. When the ship enters pre-defined zones – territorial waters or harbours – bordered by geo-fence technology, virtual perimeters for real-world geographic areas, data is generated and transmitted to Noria’s insurance system PARIS. DNK then assumes responsibility for every ship in the portfolio and automates the reporting process. PARIS generates the war risk insurance while simultaneously creating email notifications that the vessel has passed into a high-risk zone.
As soon as the ship leaves the area, the shipowner receives a new email notifying them that the ship has left the region or harbour and providing an exact price for the war cover, based on location and duration.
If the ship travels through particularly high-risk zones, such as the Suez Canal, the email also includes the option of confirming whether or not armed forces were on board the ship – triggering a 25% discount on the ship owner’s premium.
Reppe said that DNK was the first insurer effectively to automate the marine war risk insurance process.