Insurers must lose their fear of covering perishable cargo: Parsyl’s Spencer
‘We’re on a growth trajectory that hasn’t been seen in the cargo market for many years'
Chief insurance officer, Gavin Spencer, charts the cargo insurtech’s journey from Lloyd’s Lab to the US State Department
Parsyl stood out from its peers at Lloyd’s Lab by being the first firm ever to graduate to a syndicate-in-a-box. The insurtech insurer now stands out for its receipt of a US secretary of state award for corporate excellence.
Even more notable is that when the Denver, Colorado-based firm joined the first Lloyd’s Lab cohort in 2018, it had no insurance people on its team.
“To be supported with a syndicate when you don’t employ any insurance people proved Parsyl’s value proposition,” the company’s chief insurance officer, Gavin Spencer, says in an interview with Insurance Day.
Spencer, who joined Parsyl in September 2021, says it realised the beauty of insurance lay in distribution. “You can have the best product in the world, but if you’re not sure who to talk to about it or how to network across the globe with it, that becomes the main issue,” he says.
Parsyl says it is changing the way perishable cargo is monitored and protected by using data and technology to better understand, manage and mitigate risk. It provides internet of things-enabled supply chain visibility and insurance solutions for shippers and suppliers of pharmaceuticals, food and other sensitive goods.
The company was co-founded by Ben Hubbard, a former chief of staff at the US Agency for International Development, who described perishables as a “highly underserved” part of the cargo market.
“Everyone loves insuring widgets,” Spencer says, “because there’s very little risk with them”.
He says: “There are probably only three or four leaders in perishable cargo in the London market, including Parsyl, QBE and Chubb, whereas there are as many as 25 companies you can go to for insuring widgets. Perishables are underserved in terms of insurance capacity but also in terms of insurers that are committed to this class for the long term.”
Unlike the majority of insurers, he adds, Parsyl will deploy all of its capacity for a risk it likes. “Normally, capacity comprises primary and excess layers in a subscription style, so brokers like us as an access point because they don’t have to go and find insurers to complete a slip,” he says.
How it works
Parsyl is a Lloyd’s syndicate, consortium and coverholder. Its syndicate 1796 refers to the year when physician Edward Jenner began experiments into smallpox that would lead to him producing the world’s first vaccine. Parsyl’s risk management technology, which is deployed in more than 80 countries, monitors vaccines for more than 200 million people at present.
Parsyl also leads the world’s largest consortium for perishable cargo, called Essential, which is supported not only by syndicate 1796, but also by Scor’s 2015, RenaissanceRe’s 1458 and other “smart trackers”, formerly known at Lloyd’s as “follow-only” syndicates. Essential is Lloyd’s first ever perishable consortium.
As a Lloyd’s coverholder, Parsyl underwrites on behalf of select Lloyd’s syndicates, including Axa XL, IQUW and Talbot.
Each member of the Essential consortium contributes a portion of the insurance limit. Risk is shared between them, diluting individual exposure, which makes them “more likely to insure goods they would otherwise avoid”, Spencer says.
The consortium has achieved $26.2m in new capacity to date and expects to reach as much as $40m early next year. “We didn’t start writing commercial insurance until May 2022, so already to be seen as one of the top three syndicates at Lloyd’s for insuring perishable cargo is a testament to our data and the team we’ve built,” Spencer adds.
From a Lloyd’s Lab perspective, Parsyl’s evolution has gone beyond its own expectations, Spencer says, but its mission has always been “huge”. He says: “We don’t believe people should be experiencing hunger when so much food is wasted every day and we don’t believe people should be suffering from curable diseases just because they don’t live near a vaccine refrigerator. Through our data visibility and the insurance to underpin that, we are able to give people the confidence to ship perishable goods.”
“We don’t believe people should be experiencing hunger when so much food is wasted every day and we don’t believe people should be suffering from curable diseases just because they don’t live near a vaccine refrigerator. Through our data visibility and the insurance to underpin that, we are able to give people the confidence to ship perishable goods”
Gavin Spencer, Parsyl
The company’s evolution began as a test of courage.
Spencer says: “When you’re involving yourselves in the most traditional of insurance markets and you decide to be different, you must actively celebrate those differences, but in a way the technology doesn’t scare people.
“We haven’t tried to go against the grain; we’ve taken traditional insurers like Axa and Ascot with us as partners rather than competitors. That’s allowed us to navigate the usual challenges of a start-up in a traditional environment most people maybe struggle with.”
One of those struggles initially was from brokers not understanding the warranty requirements associated with the use of Parsyl’s technology and data. The focus now is on incentives, such as premium reductions and increased coverage.
“This carrot rather than stick approach has made it easy for brokers to appreciate us for traditional things, like profit commissions and no claims bonuses,” Spencer says.
He continues: “The traditional focus of our insurance partners isn’t necessarily on our type of cargo, so we’re not cannibalising their market, though, of course, there is always some overlap. Their rationale is ‘we’re very big insurance companies, we’re very averse, traditionally, to this type of risk, but we’d like to support you because we think your data is the right direction for us to go in’.”
It is difficult for insurers to aggregate data they have accrued over many years and use it in a meaningful way, Spencer says. The difference with Parsyl’s technology is it uses a format that “translates the maths into English”.
He continues: “Parsyl is a manufacturer of a suite of devices, both hardware and software, but they are a means to an end, which is collecting data in the most impactful way, and then using it in an incredibly efficient way so it is a real-time resource for our underwriters. Every time there’s a risk selection, there is real-time data.”
Launched in April this year, the Essential consortium supports capacity for Parsyl’s flagship Global Health Risk Facility, which insures vaccines and pharmaceuticals to low-income and developing nations.
Parsyl’s risk management technology is now the leading cold chain monitoring solution in emerging markets, Spencer says, and the company works with organisations engaged in humanitarian aid, such as the delivery of treatments for vaccines, sickle cell anaemia and cystic fibrosis. These organisations include Unicef, the US Department of State and the Global Alliance for Vaccines and Immunisation.
The facility used to be a standalone binder for Parsyl, with the sole purpose of covering life-saving commodities, Spencer says, but it now exists as a brand within the consortium. As such, Parsyl is able to insure “more than $1bn-worth” of vaccines, such as for measles and mumps.
The consortium co-ordinates with Parsyl’s global health team, which is led by Parsyl’s chief global health officer, Souleymane Sawadogo, to monitor vaccine shipments to 12 countries in Africa.
“Not only do we support the shipment of vaccines into Senegal, for example, we also insure them once they’ve arrived and our technology tracks how they are being distributed and stored by the local health ministries,” Spencer says.
The US embassy in Côte d’Ivoire nominated Parsyl for one of the US Department of State’s five Awards for Corporate Excellence, which it won in the category “sustainable supply chain leadership”. US secretary of state, Antony Blinken, presented Parsyl with its award at the Department of State on October 30.
Are there any no-go countries? “It’s challenging to navigate areas in geopolitical distress, but that doesn’t change Parsyl’s desire or its ability to support what these people need most, which is healthcare,” Spencer says.
Climate change is the main challenge. “The biggest fear for cargo insurers is natural catastrophe perils and there’s no doubt climate change affects how we see the impacts of those perils,” Spencer says. “The drought in the Panama Canal currently means limiting the number of ships that can pass through. Transit through the biggest choke-point in the world poses the risk of delay, which is a huge challenge for perishable cargo.
“If you have real-time data, you can track the cargo, and if you have the right algorithms, you can monitor the condition of that cargo,” he adds.
The market ought to follow Parsyl’s lead, he continues, and embrace sharing of data. “Most people in the supply chain want to hold on to their data, including when things go wrong, but the more transparency there is about the shipment of the foods you are going to eat and the medicine you are going to take, the better it will be for everyone.”
Parsyl has a “direct impact” on the environmental, social and governance aims of its partners, which is broadening the appeal of its business, Spencer says.
He concludes: “We’re on a growth trajectory that hasn’t been seen in the cargo market for many years.”