Charting Safer Waters: GenAI Powered Parametric Marine Insurance

The maritime industry faces a dynamic and unpredictable risk landscape, with emerging threats transforming the risk landscape. Traditional marine insurance often struggles to keep pace, exposing shipowners and operators to potential losses. However, Generative AI (GenAI) is emerging as a powerful tool to address these challenges, enabling the development of innovative insurance solutions like parametric insurance.

Multiple Challenges for Marine Insurers 

The maritime industry is navigating a perfect storm of emerging risks. According to industry reports, cyberattacks on maritime infrastructure have surged by 900% in recent years. At the same time, piracy remains a significant concern, as evidenced by the 135 crew members kidnapped in 2021, as reported by the International Maritime Bureau. 

Climate change is also amplifying the frequency and severity of weather-related disruptions, leading to increased risks for vessels and crew and disruptions to schedules and supply chains, further highlighting the urgent need for robust risk management and innovative insurance solutions in the maritime sector.

The Need for Real-Time Risk Assessment in the Maritime Industry

Given the dynamic nature of emerging risks and the absence of historical data, insurers face challenges in accurately quantifying and pricing coverage insurers struggle to accurately quantify and price coverage, resulting in inadequate protection for shipowners and operators. 

The capability to monitor risks in real-time and deliver precise assessments is essential for creating responsive insurance products that cater to the demands of today's maritime industry.

The GenAI Solution: Parametric Insurance for Maritime Risks

Parametric insurance powered by GenAI transforms traditional models. Instead of assessing losses post-event, it triggers payouts based on predefined parameters like a vessel entering a high-risk zone.

GenAI analyzes diverse data (satellite, weather, maritime traffic) for accurate real-time risk assessments to identify policy triggers tailored to client needs continuously.

When a trigger event occurs, GenAI automatically verifies it against the policy using real-time data. If conditions are met, the payout is swiftly processed - eliminating lengthy claim investigations.

Real-Time Risk Monitoring and Data Integration

GenAI excels in analyzing diverse global data sources, including semi- and unstructured data such as satellite imagery, weather data, maritime traffic information, and geopolitical events. 

By integrating these data points, GenAI provides accurate and up-to-date real-time risk assessments, allowing insurers to monitor potential threats and continuously identify policy activation triggers.

Defining Parametric Triggers

Guided by GenAI insights, insurers can establish specific policy activation triggers. 

These triggers can be tailored to various risks, such as:

• Vessel Entering a High-Risk Zone: A policy could be triggered if a vessel enters the Red Sea shipping routes, where piracy incidents remain high
• Cyberattack on a Port: A policy could be activated if a port's systems are compromised, similar to the cyberattack that disrupted operations at the Port of Barcelona in 2020
• Significant Weather Event: Coverage could be triggered if a hurricane like Fiona, which caused widespread disruptions in 2022, forces a vessel to reroute or delay its voyage

Clients can also personalize triggers based on their unique risk profiles and operational needs, ensuring their insurance coverage aligns with their specific circumstances.

Automated Payouts

When a predefined trigger event occurs, GenAI automatically verifies it against the policy conditions using real-time data. If the conditions are met, the policy is activated, and the payout is processed swiftly and automatically, removing the necessity for prolonged investigations and claim adjustments.

Benefits of Parametric Insurance with GenAI

Parametric insurance powered by GenAI offers several advantages for both insurers and policyholders:

• Fast Payouts: The automated claims process ensures policyholders receive payouts quickly, minimizing downtime and financial strain
• Transparency and Trust: Clearly defined triggers and automated payouts build trust and transparency between insurers and clients, reducing the likelihood of disputes
• Adaptability: Parametric insurance can quickly adapt to various risks and geographical locations, making it a versatile solution for the dynamic maritime industry

Be Future-Ready with Stargo's GenAI Powered Parametric Insurance

With over 84 piracy incidents reported in the Gulf of Guinea in 2020 alone and cyberattacks on maritime infrastructure rising by 900%, GenAI-powered parametric insurance for real-time risk assessments, automated payouts, and tailored coverage.

Beyond parametric insurance, GenAI has the potential to transform multiple aspects of the industry, from underwriting and pricing to personalized coverage options and streamline claims processing, ultimately providing better service to clients.

Our GenAI-powered platform enables you to:

• Gain instant insights into evolving threats, enabling proactive risk management and adjustments to coverage
• Expedite claims processing and payouts with GenAI for faster, more accurate settlements
• Improve accuracy and pricing models by leveraging GenAI's analysis of vast data sets
• Reduce manual effort and errors by automating data extraction, cleansing, and enrichment
• Offer tailored insurance solutions based on individual client risk profiles and needs

Schedule a demo today. Stargo users see a proven ROI and operational profitability gains in just 12 weeks.