.png)
.png){kind=small}
.png){kind=small}
Insurance companies, large and small, have enormous amounts of legacy data from serving their clients over time. These legacy data and data management systems have helped insurers become the successful enterprises they are today. Now the insurance industry faces sweeping changes in how consumers and clients want to access their information. From investors and cedents to individual policyholders, expectations for speedy, easy access to data have grown, and insurance companies are rising to meet the challenge.
Global API management and strategy company, Sensedia, focuses on bolstering digital experiences insurance companies and insurtechs can offer their customers and how APIs strategically maximize ROI and the customer experience. The organization hosted this informative discussion on how the insurance industry can better connect and modernize its systems and data. Natalia Cruz Sensedia’s Head of Open Finance, Ricardo Nozuma, IT Services Strategy Superintendent for Zurich Brazil, and Keith Moore, Professor of Practice and Faculty Director at the UNC Kenan-Flagler Business School, shared their expert advice to help insurance firms meet customer expectations and grow ROI through a more open and connected industry. Paul Wilke, CEO of Upright Position Communications, moderated the discussion.
Below are the seven key takeaways from the presentation.
The convergence of tech and insurance requires diverse systems and data to connect.
Greater connectivity launched the need to create standards for insurance products and services using APIs. Brazilian companies embraced this challenge and have already developed standards for data sharing related to insurance. For example, Brazilian Superintendence of Private Insurance (SUSEP) provides standards to implement open insurance. And now, over 70 insurance companies are participating in this ecosystem, collaborating and innovating within these API standards. The standards are helping companies define what security requirements must be implemented to protect data sharing.
Keith Moore explains that as early as the 1990s, when his team built and launched the first instant online homeowner’s insurance quote, they struggled to deliver an experience similar to Expedia or Amazon. He shares, “We had to make sure we were able to access data fast and that it was accurate, actionable for an immediate bind of insurance, and secure. So when we thought about open insurance, at the time, we had concerns about getting the right square footage, getting a lot of questions answered that the insured necessarily couldn’t answer themselves.”
Today’s open insurance opportunities, the availability of APIs, and the collaboration between insurance companies and technology providers have made open insurance a much more consumable product. Expectations for fast, accurate and secure insurance consumer experiences are now easier to meet through online e-commerce.
According to Natalia Cruz, “For consumers, open insurance will allow people to gather information from different insurance companies when they purchase their products. They will be able to centralize the information in one single app, check what products they’ve purchased, and have access to a better digital experience. So everybody benefits from this.”
Ricardo Nozuma shares, “Here in Brazil, we have a regulation called LGPD, which is a data protection regulation that ensures companies take care of, store and properly use customer information.” He explains that consumers have two significant advantages. First, they have more control of their data and an opportunity to approve insurance companies’ use of that data. Secondly, Brazilian customers can choose from many companies in the ecosystem, giving them a better opportunity to compare products for protection. With one transaction, customers receive offers from more than 50 companies and can choose the best solution.
Cruz continues, “When we talk about companies, I believe there are so many opportunities. For example, when creating new partnership models, why not have an insurtech provide services from a very traditional insurance company that has a very large portfolio of products and services? There’s the ability to implement new business models, new revenue streams, when we talk about these partnerships. Hyper personalization of products and services is possible when data is transferred from one system to another. Different types of data become visible. Of course, as long as the customer gives their consent for you to consume this kind of data.”
Open insurance offers greater opportunities for analytics, dashboards and other data viewpoints to provide insurance companies with a clearer understanding of behavior, allowing them to offer services accordingly. This deeper insight presents new opportunities to expand revenue streams.
Embedded insurance allows companies to offer the right insurance products from preferred insurers at the ideal time - when purchasing. It helps consumers manage their risk when it’s top of mind when they’re making a major purchase. It also encourages insurance purchases from select providers.
Take travel insurance as an example. Moore shares, “When consumers book flights, they can purchase travel or flight insurance during the purchase. It’s very salient and relevant to that transaction, happening at the point of need. The insurance product is typically better, not only for the insured but also for the insurance company.”
Insurance as a Service is a new model the industry is exploring and delivering. Historically, the insurance industry worked only with agents to avoid risk. But insurance as a service puts the customer in the center, understanding their needs in real-time and providing protection when they consume a product or a service.
According to Nozuma, Insurance as a Service is taking off largely thanks to the expectations of a new generation of adults. He comments, “We have a generation that no longer needs a car; they prefer to call a taxi or an Uber. Now there’s an opportunity to offer this generation a way to protect their goods just in case some kind of accident happens, or the customer forgets their computer or mobile phone inside the car. This is a new way insurance companies are trying to understand and provide protection to their customers.”
Cruz adds, “Companies will change the way they set this relationship with the customer. In the next year, they’re going to change from protecting goods and things to protecting the customer. And we’ll not look at the risk associated with the good or thing that is protected; instead, we’ll be looking at the behavior of the customer and providing security to them. We are not selling insurance for the car, but we are selling insurance for travel. That’s the adaptation companies in this market are thinking about, and they are trying to figure out how to do this fast.”
Moore believes collaboration will benefit consumers and the industry. He continues, “I think it’ll be a better consumer experience. I think you’ll see more, especially in niche products that are developed as a result of open APIs and insurance as a service, and I think you’ll see more cross-carrier product bundling. What I mean by that is the ability for independent agents or brokers and websites that are embedded to be able to offer, let’s say, a homeowner insurance product from one carrier and an auto insurance product from another carrier. They both can optimize towards combined ratio and offer products that they’re really good at versus just bundling products because that’s what the consumer needs.”
Cruz explains that a full API lifecycle management platform, like Sensedia’s API management solution, enables open APIs and open strategies. “We’ve been working with our customers to help them create those APIs, to take advantage of the APIs and open data.”
For example, APIs related to the open insurance initiative can be integrated into a constant management module. Hence, the information runs very securely while meeting customer data protection requirements, and information can be integrated into different insurance systems. Cruz continues, “The most valuable benefit that an API management solution can bring is preparing the foundation, the API foundation, the security foundation that the user can take advantage of and reuse those APIs to create innovation and bring new technologies to their day-by-day work.”
Nozuma shares that strategies can be tested quickly through APIs and microservices before implementing an API management solution. And since it’s a faster way of testing, it will also be cheaper. He explains, “The insurance company won’t have to invest a lot of money to implement, test, maybe fail, maybe succeed, and then continue working on the strategy. So basically, it helps the integrations. It enables the partnerships and also helps the companies to onboard those partners, access documentation, access the monitoring of those APIs, analyze how healthy the API traffic is, and obtain statistics about their business and technology.”
“Insurance is a very old industry, very old market. So they have very old solutions, and to try to be ahead of the market and deliver the solutions that the customer needs, it totally makes sense to have API management inside the strategy,” says Nozuma. “Legacy systems don’t have the speed to deliver what the customer needs. APIs make it easier to connect to different channels, to different partners, and to increase the speed of the revenue solutions. APIs bring the speed and functionality to provide what the customer wants to see. APIs leverage the customer experience these days.”
Cruz agrees, sharing that API management solutions transform technologies into something insurance companies and their customers can use.
Moore expands, “I think the true benefit of having open insurance with multiple APIs and multiple data sources is making sure that the data that’s being used is current.” He explained that insurance companies are challenged to determine if the data they’re using to underwrite is the most current data on the insured. He continues, “There’s a lot of things happening today with IoT and telematics, where those open APIs can really help the company in a fast and secure manner, get the most accurate data that’s the most current so that they can make it actionable for an immediate benefit, not only for the insured but for the other parties in play, whether it’d be an OEM or a third party.”
The panel also discussed the importance of consumer privacy and permission. The amount of already available and shared data would surprise many consumers. A robust API strategy protects consumers’ sensitive information and allows it to be stored in different places. When information comes from various sources, privacy and security are better maintained. Accessing one or more databases doesn’t allow access to all the data.
All panelists agreed that finding the right talent with unique skills will contribute to success. The insurance industry of the future will require people skilled in core insurance fundamentals combined with cybersecurity and data analytics.
The insurance and banking industries continue to face challenges to integrate and combine numerous data and systems in a standardized way. The amount of data is staggering. Scary. But also an opportunity to reach new customers, create new products and generate new ROI.
Cruz shares that the industry is becoming more customer-centric, “Every participant in the ecosystem is putting their customer in the center. So it is a very complex business, and we have to create the best experience we can for customers.” She adds that it’s vital to consider the customer experience and how products and services, APIs, security definitions, and data protection can be implemented to benefit all parties.
Nozuma agrees, sharing that in Brazil, regulations now allow customers to discuss opportunities and products directly with companies without having a broker in the middle. He states, “This is a game changer for the industry.”
Moore shares views on where the U.S. is headed, “I think we face a lot of the same similarities and are doing a lot of the same best practices, but the complexity in the U.S. always circles back to having 50 states and 50 departments of insurance.” He explains the complex compliance and regulatory issues insurers face to operate across the entire U.S. The differences from state to state add another layer of complexity inconsistent with what Brazil or other countries face. The U.S. market requires dealing with 50 departments of insurance, and meeting every requirement at the state level takes more work.
Sensedia has high hopes for the U.S. market. Cruz explains, “We know that open insurance in the U.S. is not a reality right now, but we do believe that the initiatives around those regions, Brazil, U.K., Europe, will influence the U.S. market.” Sensedia is working to bring best practices and professional support to U.S. insurers.
All three shared that their respective companies are striving to implement more open and connected opportunities and are encouraged by the progress of the insurance industry.
To learn how Sensedia can help your company become more open and connected, watch the Zoominar!
