Smart Insurance System Model Concept for Marine

Cargo Business
Cahyono Budy Santoso
Computer Science Departement,
BINUS Graduate Program-Doctor of
Computer Science
Bina Nusantara University
Jakarta, Indonesia 11480
cahyono.santoso@binus.ac.id
Harjanto Prabowo
Computer Science Departement,
BINUS Graduate Program-Doctor of
Computer Science
Bina Nusantara University
Jakarta, Indonesia 11480
harprabowo@binus.edu
Harco Leslie Hendric Spits Warnars
Computer Science Department,
BINUS Graduate Program – Doctor of
Computer Science
Bina Nusantara University
Jakarta, Indonesia11480
spits.hendric@binus.ac.id

Ahmad Nurul Fajar

Computer Science Departement,
BINUS Graduate Program-Doctor of
Computer Science
Bina Nusantara University
Jakarta, Indonesia 11480
afajar@binus.edu

Abstract - In this digitalization era, insurance companies have to
face many new challenges, namely a very competitive market that
has resulted in decreased margins and revenues and increased
expectations from customers for insurance company services.
Insurance companies are required to be fast-paced in providing
accurate services and pricing. In addition, insurance companies
must carry out marketing strategies that make customers feel
valued so that strong engagement will arise. The focus of this
research is on the field of marine cargo insurance, which is an
insurance product that guarantees the loss of transportation of
goods by sea. The purpose of this research is to analyze the
underwriting and marketing processes in marine cargo business
loss insurance and identify insurance models that can be smart
and comprehensive solutions. The research method is to conduct
a literature review to obtain previous problems and solutions
related to this research topic. Then the researchers conducted
observations and interviews with experts at an international
insurance company in Jakarta. From this method, the main
problems in this research are the underwriting process, product
information services, and system recommendations that are less
effective and efficient. This study proposes a smart insurance
model concept by combining technological features, namely
expert systems, chatbot, and recommend systems. It is hoped that
this research will contribute to increasing underwriting and
marketing productivity, as well as customer satisfaction in getting
fast and appropriate product services.
Keywords— smart insurance system, marine cargo, smart
insurance model, expert system, chatbot, recommender system
I. INTRODUCTION
Insurance is a non-bank financial institution that plays an
important role in protecting a business activity. One type of
insurance business is general insurance, which functions to
bear the risk of loss of an object of insurance submitted
from the insured. The insured party will provide a premium
for the insurance againts these services [1]. According to
Chapter 41 of UU No. 17 of 2008 concerning shipping,
transportation companies in the waters must ensure their
responsibilities regarding passenger safety. Included in the
case of destruction, loss, or damage to the goods being
transported as well as providing guarantees for delays in
transportation and losses to third parties, it is important to
take advantage of marine cargo insurance. So, marine cargo
insurance is not an option for companies that send goods or
products through export and import routes, but an obligation
supported by law. The principle used in marine cargo
insurance is the principle of indemnity, which is a
compensation agreement that is included in the insurance
agreement [2].
The main activity of insurance companies is to receive
premiums from customers and pay claims if any. The
determination of the premium is influenced by the
classification of the object of coverage based on the risk
category. This process, also known as the underwriting
process, is a complex decision-making task carried out by a
highly trained underwriter [3].
Along with the shift in the era from industrial to digital,
insurance companies also need to adapt and transform to
maintain their position in the industry. The existence of
artificial intelligence and other new technologies certainly
creates opportunities for insurance companies to also apply
these technologies to their business models. In an era full of
disruption, the application of technology can be utilized to
diversify businesses. Business diversification and
innovation of new products are very crucial for insurance
companies. This needs to be done so that companies are not
disrupted by new companies that have already taken
advantage of new technologies. In addition, who will be the
winner in the industry is also determined by how carefully
the company reads the changing market needs for insurance
or reinsurance protection [4].
Research [5] shows that the application of computer
information technology in the insurance industry helps to
improve the speed and nature of services, increase risk
analysis capabilities, increase business capacity and
business areas. Furthermore, digitalization can improve
communication between customers and the insurance
industry, because digitalization can help customers obtain
insurance services using secure delivery channels without
direct physical interaction with insurance intermediaries. In
addition, technology can also help overhaul business
procedures to provide the best insurance services.
 In the field of insurance marketing and sales, research No Author Year Title ES CB RS
has been carried out to propose chatbots that can be used for IntelliBot: A
insurance services [6] and the creation of a recommendation Dialogue-based
system that helps agents increase sales [7]. While in the M chatbot for the
Nuruzzaman insurance industry
field of underwriting (risk analysis), research has been , OK Problem [6]
carried out, including the following: development of a 4 Hussain 2020 V
prototype knowledge base system for underwriting life An Explainable AI
insurance [8], expert system for contractor evaluation [9], Decision-Support-
automation of underwriting for loan processes [10], and an System to Automate
S Sachan, JB Loan Underwriting
expert system to assist in the legal process of handling cargo 5 Yang, 2019 [10] V
claims [11]. Maritime cargo
The problems obtained in the study include the claims in Vietnam:
following: practical issues and
the design of a
• Risk assessment is still manual, so that the decision- virtual consultancy
making process becomes less than optimal. The process expert system based
of determining the premium rate and data risk on artificial
acceptability is very complex. [8][10][11]. intelligience to
T M Phuong assist non-lawyer
• The need for insurance products cannot be obtained 6 Pham 2018 users [11] V
quickly according to customer needs [12]. For
information, the marine cargo insurance business is an L Lesage, M
international business, so it requires product Deaconu, A A recommendation
Lejay, JA system for car
information services at all times and places. 7 Meira 2020 insurance [7] V
• Customers do not get complete information in obtaining OUR
information from the risk assessment results [8]. RESEARCH V V V
• There is no system recommendation that can direct
consumers in choosing the type of insurance and The Research Question in this study is to identify the
information on potential risks based on historical data needs and features needed to build a smart insurance system
or information [7]. model for the marine cargo business. Meanwhile, the
By looking at these problems, it can be concluded that purpose of this research is to map out the technological
the main problem in this research is the problem of product features that can be integrated with the existing system, to
information services, the speed and accuracy of the be able to support the smart insurance system model in the
underwriting process which is relatively not optimal, and marine cargo business. The purpose of this research is to
there is no system recommendation that can direct the analyze the underwriting process in marine cargo business
selection of insurance types and analysis of potential risks. loss insurance and identify insurance models that can be
Referring to previous studies, the solutions offered are still smart and comprehensive solutions.
not complete and comprehensive in solving the main
problems in this study (refer table 1). For this reason, a
II. THEORETICAL FOUNDATION
comprehensive solution is needed in the form of a smart
insurance model. This research focuses on the marine cargo
business loss insurance domain. Notes (ES : Expert Sytem, According to [1], Insurance is an agreement between two
CB : Chatbot, RS: Recommender System). or more parties. The insurer will be bound to the insured, by
receiving compensation for insurance premiums. The insurer
TABLE I. MAPPING PREVIOUS RESEARCH will provide compensation to the insured due to damage,
loss, or loss of expected profits. While what is meant by
No Author Year Title ES CB RS "marine cargo insurance" is insurance that provides
Smart Underwriting protection or guarantee against damage to the object of
System: An coverage as a result of marine hazards (Maritime Perils) that
Intelligent Decision occur during transportation by sea [13].
Support
System for The digitalization process will change the way in
Insurance Approval which services are delivered and the insurance business. The
A Dubey, & Risk Assessment
1 Parida 2018 [17] V use of chatbot technology, artificial intelligence, big data,
and the internet of things will have a major impact on the
A Knowledge- insurance service delivery process from the time of
MK Based System for insurance product manufacture, through the underwriting
Joram,BK Life Insurance
2 Harrison 2017 Underwriting [8] V process, policy making process, marketing process, claim
SuretyAssist: Fuzzy process, and customer interaction [19]. Figure 1 below
Expert System to illustrates that rapid changes occur throughout the insurance
Assist Surety value chain, from product manufacturing, underwriting,
Underwriters in
Evaluating
marketing, claims and customer relationship management.
Construction
K Marsh, AR Contractors for
3 Fayek 2010 Bonding [9] V

Fig 1. Digitalization and the insurance value chain [19].
The expert system is one component of artificial
intelligence. An expert system is a computer program that
can simulate human behavior in a well-defined field of
knowledge and assist in the decision-making process as an
expert. An expert system is built from two main components,
namely an inference engine and a knowledge base. The
knowledge base is a collection of human expert opinions in a
particular field, a synthesis of books and regulations. Expert
systems have the potential to be developed to solve various
problems, such as in terms of making financial decisions and
underwriting insurance policies [14].
Based on research [18], research opportunities in
insurance include ratemaking and underwriting, chatbots,
customer segmentation, cross-and up-selling
recommendations, fraud detection, and increasing the quality
of the customer experience with regard to sales and service
processing (e.g., underwriting processes, claims settlement,
improving transparency of service).
A Chatbot is a computer application developed and
designed to be able to interact with humans via text messages
or voice. The chatbot has been equipped with artificial
intelligence and natural language processing, which makes it
an intelligent computer application that can answer questions
posed by humans. The Chatbot was built to help humans in
terms of information service and customer service, with
topics that have been discussed. Many existing chatbots are
built according to the topics and problems that someone
wants to solve for personal or other business purposes. In the
chatbot, a knowledge model has been implanted to answer
questions that follow the context that has been prepared.
Chatbot consists of the user interface, artificial intelligence,
and the integration of the two. These three combinations
form a chatbot [15].
A recommendation system is a system designed with the
aim of helping users find something they might like by
providing recommendations to users. The recommendations
relate to various decision-making processes such as what
items to buy, what music to listen to, or online news to read
[16].
Previous studies related to underwriting and other related
issues in the insurance sector are as follows. A study
proposes an application prototype that can carry out the
underwriting process or risk assessment on life insurance.
This research uses a rule base system of algorithmic
techniques. The research output is to produce a decision
whether the risk is accepted or not and can determine the
level of risk of the insurance object [8]. Another study
proposes the development of a decision-making system
model on underwriting based on historical email data. The
output can generate an automatic email containing the
insurance plan and its recommendations. Unstructured email
data is extracted, trained, and evaluated using machine
learning techniques, then checked for the accuracy of the
training model and compared [17]. A study conducted
research on a decision-making system that supports credit
applications. The technique used is the belief rule base
algorithm. This algorithm combines expert knowledge and
previous historical data. The research output is to produce a
decision whether or not the risk is accepted in the credit
application [10]. Another study proposes an expert system
model to take advantage of the role of experts in handling
marine cargo. The technique used is a rule based system
algorithm [11]. Meanwhile, his other research proposes an
expert system model to evaluate the contractor using a fuzzy
algorithm [9].
Another study developed a chatbot model in the
insurance sector. This study develops the quality of response
with users with a technique based on user dialogue. The
output of this research is to produce the best performance on
chatbot responses with users in the insurance domain [6].
While other research proposes a recommendation system
model in the field of car insurance. The technique used is to
use the XGBosst and Apriori algorithms to be able to choose
customers who can be recommended to get additional
coverage offers on car insurance [7].
The contribution of this research is to formulate an
integrated solution model to overcome problems related to
the underwriting process, product communication, and
product recommendations in the insurance sector that are less
than optimal with the help of technology. This research is
also useful for increasing process automation, especially in
the underwriting process, and increasing customer
engagement in marketing [20].
III. RESEARCH METHOD
A. Proposed Research Framework
This research covers a smart insurance model for the
marine cargo business. Based on the objectives of the
research that have been described previously, in detail, the
proposed research framework is as follows:
Fig 2. Proposed research framework
B. Collecting Data
This stage is to collect data, either through interviews
with related users (experts) and observation of existing
documents. Observations were made by conducting direct
interviews with directors of insurance companies and senior
underwriters at international companies in Jakarta,
Indonesia. The objectives of this stage are as follows:
• Get the current system procedure. It can be in the form
of a flowmap.
• Get the current working paper
• Obtain the necessary data related to the current
problem.
• Get a detailed picture of the problems that occur in the
current condition.
• Determine the scope of the research problem
• Determine the stakeholders involved in this research.
• Stakeholder expectations for the development or
improvement of existing models.
C. Needs and Features Analysis
The stages in conducting the needs analysis process are
as follows:
• Carry out the process of analyzing procedures, working
papers, data, and descriptions of problems from the
results of the data collecting stage.
• Conduct a literature review to see the research that has
been done previously to be able to solve these
problems.
• If there is none, then a proposed model is formulated to
be able to solve the problem and become a novelty of
the research.
• Based on the needs model and the literature review,
technology features that can be used to solve these
problems can be developed.
D. Smart Insurance Model Concept
At this stage is to propose a system model consept based
on system activities, stakeholders, and features used. In the
development of this model, identification of the following
matters was also carried out, such as: factors influencing the
risk assessment process in underwriting and factors that
influence the process of determining automatic
recommendations for determining the choice of risk types
and analyzing potential risks.
E. Evaluation of The Smart Insurance Model Concept
Evaluation of the model concept is carried out to ensure
that the model features that have been formulated in the
previous stage are in accordance with what is needed by the
stakeholders. This process provides a clear description of
the features that have been determined so that they can be
designed into the system model. This validation is carried
out by providing functional requirements data to
stakeholders for the evaluation process. For the method, it is
planned to use a questionnaire.
IV. RESULT AND DISCUSSION
This chapter is divided into two parts, namely the
analysis of the current system and the proposed system
model to be designed.
A. Analysis of The Current System
After the data collecting process was carried out, it was
found that the research process involved 3 stakeholders,
namely underwriters, marketing, and customers or brokers.
To analyze the system using a use case business model.
Fig 3. Business Use Case current running systems
The flow of activity on the system running at the
insurance company starts from the registration process of the
insured or broker as a prospective client at the company.
Marketing will check the completeness of the prospective
client's data, and if it is complete then marketing will accept
and register prospective clients. For clients who have
registered, they can go directly to the next stage. For the next
stage, the broker or client gets an insurance object form. This
form contains detailed data about the object to be insured.
For this research, the object data is related to the marine
cargo insurance business object data. During the process of
filling out the form, the broker or client can consult with
marketing to be able to complete the form filling process.
When finished, the form is submitted to marketing.
Marketing will carry out the process of checking and
validating the completeness of the input data. If there is an
incomplete form filled out and the data needs to be
confirmed, then the form is returned back to the broker/client
to be completed. If the form is complete, then Marketing will
give it to the underwriter. Based on the form data and the
loss record on the object, the underwriter will provide
recommendations for the selection of the type of insurance to
be used and information on potential risks based on the
object data entered in the form. In addition, the underwriter
will provide the results of a risk assessment of the object. If
accepted, a premium rate will be defined. Meanwhile, if the
results are rejected, there will be a detailed explanation of the
reasons for the rejection of the insurance object.
Based on the activity of the running system, the system
needs can be identified, namely:
• Client/broker registration process
• The process of filling out the insurance object input
form
• The process of making recommendations for the type of
insurance to be used
• Process for making recommendations on potential risks.
• The process for creating risk assessment results
B. Proposed System Model
Based on the identification of these needs, the features
and technology to be used can be formulated. The first
feature is the online communication service feature with
customers/brokers for client registration needs and filling out
insurance object input forms. For the technology used, you
can use chatbots and the web. Meanwhile, the next feature is
the automatic recommendation feature for the need for
recommendations for choosing the type of insurance and
information on potential insurance risks. For the technology
used, an automatic recommendation system can be used.
Next is the underwriting automation feature for the need for
automation of underwriting risk assessment results. For the
technology used in the Expert System.
For the user's business model, after the data collection
process is carried out, it is found that this research process
involves 3 stakeholders, namely underwriters, marketing,
and customers or brokers. To analyze the system using a use
case business model.
The business model based on the proposed use case is as
follows:
Fig 4. Proposed use case model of smart insurance system
The activity flow in the proposed system begins at the
client/broker stage using an online communication
application for the registration process and input of insurance
objects. The application will check the completeness of the
data entered. Clients/brokers can actively consult during the
registration process and input insurance objects using the
application. This online communication can be done at any
time. In the early stages of making an expert system, the
underwriter will provide data and knowledge for the
underwriting process. Besides that, the underwriting party
will also provide their knowledge about making the
automatic recommendation system. The application system
will run according to the rules and business that have been
determined at the beginning. The application will
automatically provide automatic recommendations to
clients/brokers for types of insurance and potential risks and
complete risk assessment results with detailed explanations.
If a case is found that is different from the knowledge rule or
business that has been entered into the application system,
the underwriter will carry out a checking and analysis
process, and then enter the new knowledge into the
application system. And so on, so that the application system
will be smarter in handling services.
For the proposed application model, the following
features are as follows:
Fig 5. Proposed smart insurance system application model
The insurance company application database is carried
out with an extract transform loading process to obtain data
needs such as detailed information on insurance objects such
as premium and claim data, especially related to marine
cargo data. The data stream is entered into the system
database. In the database, the system stores the data needed
for the needs of chatbot features, system recommendations,
and expert systems.
Based on the results of data observations and interviews
with expert users, the influencing factors in terms of risk
assessment in the underwriting process include coverage
type, perils covered, type of goods shipped and packaging,
shipment route, time of voyage, mode of transport, vessel
age and condition, loss record, pure rate, and market rate.
These factors were considered as inputs in the underwriting
process.
For the algorithm used in the Expert System in this study,
the IF-THEN rules structure is used (forward chaining
method). For example, the simulation is as shown below.
The simulation below uses five factors, namely coverage
type, perils covered, type of goods shipped and packaging,
shipment route, and length of voyage. The PctPriority
column shows the percentage weight in the process of
determining the rate. While the Weight column shows the
results of the rate after making choices in the Remarks
column. The selected example in Factors Coverage Type is
Waterborne Transportation, so the weight obtained is 0.004,
based on the reference table in Table 2. From the calculation
results, it is found that the premium rate obtained is 0.17%.
So if it is assumed that the value of the risk insured is 1
million dollars, then the premium that needs to be paid is
0.17% x 1 million dollars to 1700 dollars. The reference
table for each factor is based on the knowledge of the
underwriter, and it must always be updated. Factors can also
be added according to the development of cases found during
the underwriting process.

Fig 6. Expert system formula simulation
TABLE II. COVERAGE TYPE REFERENCE
Code Description Weight
AF Air Freight 0.002
LT Land Transit 0.003
MT Multi Mode Transport 0.001
WT Waterborne Transportation 0.004
The chatbot feature is used as a means of online
communication with client users to help input the risk of the
object to be submitted. The chatbot can also issue an
assessment output from the expert system, after the input
process for the risk object has been completely inputted. For
chatbots based on expert systems using the forward chaining
method. For the chatbot process flow, it starts with the user
entering a question into the input box in the application. The
questions are separated into several words and searched for
keywords. If the keywords are related to registration, a
registration form will appear or a list of questions related to
client registration will appear. If it is related to the need for
risk assessment, a risk object filling form will appear or a list
of questions related to filling a risk object will appear. When
the filling is complete, a decision will immediately appear
whether the risk is accepted or not. If the risk is accepted, the
premium rate can be calculated directly. With this, clients
can immediately get their needs through chatbot media
quickly and precisely. The keyword database needs to be
updated and updated, so that the answer information is more
complete. In carrying out the risk assessment process, it is
necessary to prepare the correct and complete keywords, so
that clients can be helped easily to get information on the
results of the risk assessment quickly and precisely.
The recommend system feature can be used as an
ingredient for decision making in choosing the type of
insurance to be chosen, and can also help recommend
locations or travel times that have a low risk. The source of
the data can be data from a reference table that is always
updated by the underwriter or it can be from an existing
company database.
V. CONCLUSION
This study proposes a smart insurance model for the
underwriting process, information services, and system
recommendations. This research focuses on the marine
cargo business loss insurance domain. This model concept is
expected to help improve the performance of the
underwriting and marketing processes in insurance
companies. Besides that, clients also get more service
satisfaction because they get faster, more precise
information, and the service time can be all the time.
The limitations of this study are as follows:
• The proposed system model is still global.
• The prototype design is still not detailed
• The evaluation of the model is still in the planning stage
and not yet detailed
For the next research, it is expected to be able to
propose a detailed and complete system model design and
equipped with a testing process, so that this research can be
tested and can be implemented in real terms.
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