“Hard” Market Conditions in Ocean Cargo Find a Solution in InsurTech

Over the past year, there has been an increasing number of Lloyd’s syndicates who have withdrawn or been closed from the London marine cargo market. The decline of these cargo syndicates reduces the overall supporting capacity from market leaders but also leaves over $6.4 billion dollars of market share up for grabs.

The reasons for this, according to Lloyds, include cargo reportedly running at a 135% loss ratio. This has put a large number of Lloyd’s syndicates either under review or closed completely and brokers are being forced to find other alternative options for their clients. There was also consolidation in 2018 with a number of larger insurance companies purchasing more vulnerable companies. This has resulted in a reduction in the number of market leaders available which restricts different options for insureds.

Lloyd’s has instructed its managing agents to provide a quarterly reports plan to improve the underwriting performance of the seven under-performing classes— Life Sciences/Pharmaceuticals being one of them. The bottoming out of cyclical market conditions, frequently caused by over-capacity, often results in violent price and coverage adjustments that punish not only those insureds with poor operations but the good as well.

The use of technology and data can help insurance buyers to differentiate their risk profiles. Corvus specializes in providing broad Ocean Cargo and Stock Throughput coverage for spoilage and other perils for Temperature sensitive products within the Food and Life Science industries. We are using data from leading IoT sensor providers to provide something NEW that is helping Brokers on our platform differentiate themselves and win new business with Life Science and traditional food customers.

Corvus compares the temperature shipment data of an insured to our mammoth database of shipment data. Our algorithms produce a Corvus Score through which we communicate our underwriting outcomes and coverage grants. We also use our CrowBar data platform to bring new information to our clients throughout the policy year in order to help our insureds identify anomalies that might lead to a claim. Working together, we manage risk and reduce claims. The win-win solution of Corvus, for those insureds that want to engage with the use of their data, is a better outcome from a “hard” insurance market that acceptance of price increases.

scientists

The Big (Uninsured) Risk for Early Stage Life Science Companies

Early stage Life Science companies are invariably betting a great amount of capital on the human clinical trial testing of their first products. Immense work and expense go into lining up clinical trial sites, scaling up early manufacturing (or contract manufacturing) and building the team of Clinical, QA/QC, Medical, Legal, and related resources.  All of that overhead is devoted to just one thing— advancing the clinical material into clinical trials. However, something as simple as spoilage of a shipment can lead to an immense uninsured loss.

Time to market may be a huge factor of course, but risks associated with idle unproductive employees and the associated salaries, benefits, rent, and other overhead that often add to losses while the batch from the shipment is being recreated are usually uninsured with standard Ocean Cargo policies.

This proverbial tightening of the funnel should be a great target for important insurance coverage but has been left uninsurable by incumbent insurers in the market. Amy Sinclair, Life Sciences Practice Leader in the Boston office of Arthur J. Gallagher said, “A loss of clinical trial material in transit can lead to a Business Interruption and Extra Expense Insurance loss. We can cover that under a Property Insurance policy while the goods are in a fixed location like our client’s manufacturing building.  But until now, we have been unable to get insurance for our clients that responds to the risk exposure caused by a loss of goods while in transit or at warehouse or clinical trial locations.”

Corvus Insurance, with a deep understanding of Life Sciences logistics, has developed a proprietary Extra Expense form in an attempt to make whole those Life Science companies that suffer an insured loss (from spoilage or any other insured peril – theft, fire, windstorm, etc.).  

“This new coverage from Corvus fills a gap that responds to a critical, but previously ignored, risk exposure for Life Science companies,” said Steve Sawyer of Woodruff Sawyer in San Francisco. The policy form is available on request from Corvus.

Corvus Insurance Holdings underwrites Smart Cargo™ Insurance for the Life Sciences and Food industries on behalf of Argo Insurance Group (Best’s Rated, A, XIII).  Brokers on our platform are bringing needed, innovative and differentiated product into the market and great value to their clients.

 

Umbrella Cargo

Corvus and Sensitech offer ColdStream Bronze Fee Waiver with Smart Cargo Insurance™

Smart Cargo Insurance™ from Corvus uses temperature stability data, collected for decades for shipments of food and pharmaceutical products, to predict and prevent the major cause of Cargo Insurance losses for these companies – spoilage.  We do that by comparing the temperature stability of an insured’s shipments against that of hundreds of thousands of shipment data points. We produce a relative risk score that we share with broker and client. Corvus delivers this information on its CrowBar data platform.  

For insureds that have the best scores, i.e. the highest temperature stability, we offer lower prices and broader coverage on an otherwise standard, broad global Cargo Insurance policy underwritten by Argo Insurance Group (Best’s rated A, XIII).  But the Corvus experience does not end there.

One of our two primary markets is the Life Sciences industry.  Here, many early stage companies buy their first sensors directly at two points of their corporate life – initiating clinical trials and initiating sales of an approved product.  At each juncture, exposure to loss of goods as a result of spoilage spikes. For companies with little or no historical data, Corvus and Sensitech, the world’s leading supplier of temperature sensors for logistics, have teamed up to bring the market new value for shippers of temperature sensitive goods.  With the purchase of Smart Cargo Insurance™ from Corvus, the initiation fees and first year service fees for the Sensitech Bronze Level ColdStream® data platform are waived. Since the purchase of insurance and the expansion of activity (clinical or full market) happen at the same time, it is a timely win for early stage Life Science companies.  

With our powerful combination, during the policy period, we will monitor new information from ongoing shipments.  If we spot negative trends, we will inform broker and policyholder with actionable recommendations generated by the CrowBar.  We call this ongoing digital inspection service Dynamic Loss Prevention™. It is unprecedented in the insurance industry. In fact, Smart Cargo Insurance is the first IoT (Internet of Things) based Commercial Insurance policy ever!

We also analyze the temperature stability data to determine other patterns that might be predictive of claims.  For examples, we break down the temperature stability readings based on shipment source and destinations. In that way we are able to help an insured see “near misses” of spoilage in order to use that information to improve its internal processes.  This form of Business Intelligence is all driven by our software tools.

Risk scores.  Dynamic Loss Prevention™.  And Business Intelligence. That’s why we call it Smart Cargo Insurance.  

Using Cargo Temperature Data To Prevent Future Spoilage

Smart Cargo Insurance™ from Corvus uses temperature stability data, collected for decades for shipments of food and pharmaceutical products, to predict and prevent the major cause of Cargo Insurance losses for these companies – spoilage. We do that by comparing the temperature stability of an insured’s shipments against that of hundreds of thousands of shipment data points. We produce a relative risk score that we share with broker and client. Corvus delivers this information on its CrowBar data platform.

 

For insureds that have the best scores, i.e. the highest temperature stability, we offer lower prices and broader coverage on an otherwise standard, broad global Cargo Insurance policy underwritten by Argo Insurance Group (Best’s rated A, XIII). But the Corvus experience does not end there

 

During the policy period, we monitor new information from ongoing shipments. If we spot negative trends, we inform broker and policyholder with actionable recommendations generated by the CrowBar. We call this ongoing digital inspection service Dynamic Loss Prevention™. It is unprecedented in the insurance industry. In fact, Smart Cargo Insurance is the first IoT (Internet of Things) based Commercial Insurance policy ever!

 

We also analyze the temperature stability data to determine other patterns that might be predictive of claims. For examples, we break down the temperature stability readings based on shipment source and destinations. In that way we are able to help an insured see “near misses” of spoilage in order to use that information to improve its internal processes. This form of Business Intelligence is all driven by our software tools.

 

Risk scores. Dynamic Loss Prevention™. And Business Intelligence. That’s why we call it Smart Cargo Insurance.