How technology can help logistics insurance?
E-commerce had a hockey stick grow in the last decade. Today we can buy something built on the other side of the world and get at our house in a few days. Behind o this apparently “magic” is the heart of globalization: complex but effective supply chains.
But this e-commerce growth brings new challenges: more and more geographies (both in sellers and buyers), an increase in orders (people buy every day, and expect 1-day delivery!). The emergence of new business models like D2C and dedicated marketplaces such as Shopify, and Etsy put more pressure on supply chains not to mention the trend of buying online high-end products (e.g. sneakers, smartphones, jackets).
If we have more shipments and the value of those cargo is increasing how can we make sure that products are delivered on time, with no damage and not stolen?
Half of the answer is a business used for a long: insurance! An agreement between two parties to cope with eventual negative operation outcomes. But traditional insurance policies were not designed for these new operations (e.g. shipping a $1000 jacket) or for these amounts of daily operations.
The other half of the answer is, of course, technology! Every time technology creates a new paradigm and, therefore, side effects, it’s up to new technology to emerge and fix the created issues!
New Technology is revolutionizing the logistics insurance industry by enhancing risk assessment, improving claims processing, and providing more personalized insurance products.
Telematics and GPS Tracking:
Real-time tracking of cargo and vehicles helps insurance companies assess the risks associated with transportation routes, driving habits, and delivery times. This data can lead to more accurate pricing models and help in the quick resolution of claims by providing precise information about the location and condition of goods.
Internet of Things (IoT):
IoT devices can monitor the condition of goods in transit, including temperature, humidity, and impact events. This can be crucial for perishable goods, chemicals, and fragile items. Insurers can use this data to develop customized insurance products and to settle claims rapidly and accurately.
Big Data Analytics:
The use of big data enables insurers to analyze vast amounts of information on traffic patterns, weather conditions, accident data, and more. This analysis can lead to better risk assessment and premium determination. It can also help identify potential areas for loss prevention, thereby reducing claim frequency.
Blockchain:
Blockchain technology can streamline the claims process and reduce fraud. By creating a permanent, immutable record of transactions, blockchain ensures transparency and trust in the claims process. Smart contracts can automate claims payments when certain conditions are met, speeding up settlement times.
Artificial Intelligence (AI) and Machine Learning:
AI can process claims faster by extracting data from documents, analyzing it, and even making payout recommendations. Machine learning algorithms can predict which types of claims are likely to be fraudulent. They can also be used to optimize insurance pricing by identifying patterns and risks that might not be evident to human analysts.
Advanced Driver-Assistance Systems (ADAS):
In-vehicle technologies that improve driver safety (like collision avoidance systems) can help reduce the number of accidents, leading to fewer claims and lower costs for insurers. Insurers may offer lower premiums for vehicles equipped with advanced safety features.
Predictive Analytics:
By using past data to predict future events, predictive analytics can help insurance companies anticipate claims before they occur and take preemptive actions to mitigate risks.
Cybersecurity:
As logistics and insurance companies increasingly rely on digital technologies, protecting data against cyber threats is critical. Cybersecurity measures are crucial to protect sensitive data from breaches, which could lead to financial losses and damage to reputation.
Sensefinity has a complete platform with sensors, trackers, analytics, ML/AI, and blockchain that is perfect for insurance and logistic companies to leverage the power of data to fuel new insurance policies.
If you want to do a quick chat and exchange ideas about the future of insurance for supply chains, just