AI, data analytics and technology are transforming almost every aspect of the air freight sector, including cargo insurance – enhancing customer experiences, reducing operational costs, helping to better assess risk, detecting fraud, and reducing human error, highlights Matthew Phillips from cargo insurance specialist Breeze
Cargo insurance, much like air freight forwarding, is undergoing a digital revolution. Artificial Intelligence (AI), data analytics and technology are transforming almost every aspect of the industry – enhancing customer experiences, streamlining internal processes, reducing operational costs, helping to better assess risk, detecting fraud, and reducing human error.
For example, using AI and big data, an insurer can quickly and accurately assess the risk of an air cargo consignment, looking at route, commodity type, airline and other data points, and apply risk-based premiums that, in many instances, reduce existing flat-rates.
AI and data analytics can also be used to improve claims processing and customer experience by deploying machine learning algorithms to automatically process and triage claims, reducing the time it takes to resolve them. Additionally, predictive analytics can help to identify fraudulent claims, resulting in cost savings and reduced losses.
Lastly, by analysing data and behaviour, insurers can identify gaps in existing cargo product offerings and develop new insurance products and services that better meet customers’ needs. Thanks to the availability of data, more risks can be underwritten in profitable ways.
There is a lot of untapped potential to be found in leveraging these tools to improve existing, but outdated, insurance processes for air, sea and road cargo – processes which haven’t really changed in the last few hundred years.
However, the real challenge is not simply using AI, data, and technology, but rather leveraging these tools and methods whilst also making sure that forwarders and logistics companies actually get what they need in a simple and frictionless way.
In other words, how do you find the balance between complicated back-end processes such as AI, data, and code, and simple, slick, user-friendly processes for customers to engage with, which also solve their pain points? This is the hard part, and it is something that we have made our mission to find out.
At Breeze, we have developed a platform that uses and leverages AI, data, and analytics for cargo insurance, taking these elements to a new level in the cargo insurance industry – for all modes of transport, including air cargo, sea cargo, and road transport.
The first thing we did to ensure that we always have our customers’ needs as our north star, was to work as operators at a freight forwarding company. We knew that the best way to learn about cargo was to put ourselves at the heart of the process, the place where almost all cargo goes through – freight forwarders.
We spent months working as forwarders, learning every little detail and corner of the business, from operations to finance. That’s the only way we could understand our customers (forwarders and logistics companies) and their needs.
Insurance is often missed
This is how we discovered that a major gap exists for forwarders when protecting their shippers’ cargo. As freight forwarding agents, we found that cargo insurance is often missed, and is not being proactively offered to shippers when they book their shipments. Shippers often don’t even know that their cargo isn’t insured, and many of them mistakenly think that insurance is already provided by default as part of the shipment. Deep-diving into this, we found that ~70% of global cargo is uninsured or underinsured.
We also realised the two main reasons forwarders aren’t properly offering insurance: (1) they have A LOT on their plate, and often don’t think about insurance; and (2) they don’t have the right tools and technology to seamlessly add this as a step in their everyday processes. Finding a solution for these problems became our main goal and obsession.
Finding a solution, we thought, will allow forwarders to offer insurance for every shipment at the time of booking and, in doing so, ensure that shippers are protected, while also increasing their sales and revenues.
Now, with this extremely important information, we were able to take our extensive AI, data, and technology skills and elegantly tie them to a product that is laser-focused on solving the problem. A slick design that sits on top of an enormous AI and data foundation, constantly improving the insurance offering for forwarders and logistics companies – allowing forwarders and logistic players to focus on powering the global supply chain.
Matthew Phillips is chief commercial officer at cargo insurance specialist Breeze