What is ‘open insurance’?

According to Accenture, Open insurance is “the practice of insurers sharing and consuming data and services in order to create more appealing value propositions and new revenue streams. These data and services are exchanged with third parties… and are made externally accessible and openly consumable by means of application programming interfaces (APIs). Where relevant, customers authorize their service providers to make their data accessible, in return for… better, more personalized services and experiences.”

‘Open insurance’ is not the industry norm yet. Everyone wants to reduce rekeying, or avoid entering data at all, and remove the ‘friction’ from the journey. That’s not a new ambition. Celent believes that insurers that fail to build APIs into their platforms won’t be competitive in five years.

Many insurers are already leveraging ecosystems to enhance their product offerings with services from business partners. At Sapiens, for example, we are working with our customers to develop and support their evolving ecosystems. Examples in the UK include integration with Claims TPAs, Quotes hubs and data enrichment sources. Most efforts are somewhat proprietary right now but the next step will be truly open platforms and marketplaces, such as Ping An 3.0, in reference to the Chinese insurer’s era of “integrated finance +” and “internet +”

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However, the insurance industry is still lagging behind banking. Here we have seen a major shift, driven by innovative platform businesses like Fidor and Revolut but also by regulation. Insurers don’t have regulators pushing them as hard to open their businesses and share data. Watch this space!

What are the main benefits of moving to an ‘open insurance’ model for both insurers and customers?

The benefits for insurers and customers are many including:

  • Rapid delivery of innovative yet fairly priced tailored offerings
  • Retention of the customer relationship and enhanced brand value whilst delivering these new products and services
  • Cost effective ‘spin-up’ of new partnership and distribution models providing a wider and deeper addressable market
  • Additional revenue sources through monetizing the explosion of information and data collected along the way
  • Increased operational efficiencies arising from reduced rekeying and reconciliation
  • Higher customer retention by providing a ‘delightful’ customer experience (a real comment!)

All this can be done today without open insurance, but it’s not easy. In the Open API world it will be much easier and faster to deploy if all systems “speak the same language” or at the very least map their internal object model to that common language. This can be pivotal in the perpetual “build vs. buy” discussion, where the discussion will then shift to “assemble” rather than “build” – and insurers can take discrete pieces of software and easily assemble them to create the value chain that works specifically for them, without the overhead.