Open Insurance
8
min of reading
January 17, 2022

Open Insurance: API Magic for Insurers - Part II

David Roldán Martínez
Senior Solutions Architect
Expert in Open Banking, Open Finance, Open Data, and other Open Economy related sectors. I can help you to reach your business goals by assessing your IT processes and infrastructure and guiding you to improve and optimize them.
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In the first article of this series, we learnt what Open Insurance is and why it boosts new business models. In this article we will explore some of the key points to consider to offer a new value proposition.

Open Insurance requires companies to open their data sources to other organizations and to share and consume data and services from many sources in order to create new value propositions both by enhancing user experience (and, thus, deepening the customer relationship) and/or generating new revenue streams.

Figure 1: Essential Functions of an Open Insurance Business Model (source Accenture)

Legislation in Europe and the UK forced banks to open their data resources and share customer information with other organizations. The European Union’s revised PSD2 (Payment Services Directive) and the UK’s Open Banking Standards require banks to give other financial services providers access to their customers’ banking information if account holders give consent. These initiatives demonstrate how banking regulators are willing to encourage innovation and competition and from its evolution insurers are able to extract some lessons to learn likely to affect their businesses. Some of them are:

  • Customer expectations will increase: open banking is providing customers with a plethora of new data-rich services and they will also want enhancements for their insurance-experience.
  • Technological platforms will rocket data flows: open banking has shown how financial services companies can monetize their data resources based on the value of data held by partners. Insurers must take notes on this.

Business models will change: market pressures will force insurers to find new ways to engage with customers and partners by finding new business opportunities, if they are able to shift from the traditional paradigm to a more disruptive one (see Figure 2).

Figure 2: Traditional Insurance vs Open Insurance Paradigms (source Majesco)

Thus, it can be said that insurers are at an explanatory phase with an eye on what is happening on Open Banking to start seizing the opportunities of openness. Before insurers  move forward and invest in potential use cases they have to provide clear answers to five strategic questions:

  • How does openness increase relevance to our customers?
  • Which capabilities do we need to leverage in PSD2 and open banking?
  • How can we partner with the InsurTech scene, which is already developing services around PSD2 and Open Banking, to accelerate?
  • What can we learn from banks and other parties connecting to their ecosystems?
  • How can we attract the right talent to deliver on these new opportunities?

In the next sections will describe some examples of open insurance business models. Note that this is not an exhaustive description. 


Allianz

In 2018 Allianz opened up some of its Allianz Business System (ABS) as an open source platform for other insurers. Whilst the basic version is free, the enterprise edition holds a license fee.

ABS can be used in any line of insurance to manage policies, data, claims and benefits.

Barclays

Barclays has a suite of APIs that enables the retrieval of account information for Barclays customers.

The company also runs Barclays API Labs, which enables developers and partners the opportunity to build and experiment with new APIs.

Also worth noting is the Barclays Smart Business Dashboardwhich is a business management tool for SMEs that can integrate with a number of apps (Linkedin and MailChimp, for example) to make operations easier. 

DigitalGenius

DigitalGenius offers end-to-end resolutions of customer enquiries through deep learning and open APIs.

DigitalGenius utilises deep-learning algorithms, which are trained on historical customer service transcripts and integrated directly into the contact centre’s existing software. The platform automates and increases the efficiency of customer service across communication channels like email, social media and mobile messaging. This not only cuts operation costs, but allows human agents to focus on more complicated tasks or conversations. 

Blue Marble Microinsurance

Blue Marble Microinsurance provides a relatively rare example of a global collaborative innovation consortium. Formed of nine insurance entities, the company has a small core management team with access to a large talent pool of owner-entity employees.

Blue Marble’s projects with smallholder farmers in Zimbabwe and Colombia offer parametric insurance protection against extreme weather conditions, using satellite, remote and point- sensor technology. These enable the insurer to develop a comprehensive understanding of global climate datasets and to create plant stress-mapping models.13 The upshot: when heavy rains or drought strike, claims are automatically calculated and instantly paid to policyholders. 

CoverWallet

CoverWallet is a small business insurer that launched the CoverWallet Open Platform in June 2018, which houses its first API for Commercial Insurance. The services are aimed at financial institutions and lenders, amongst others.

The API covers three services – Quote, Buy and Manage – and can be used individually, in pairs, or all together. These provide insurance estimates, quotes and policies from leading carriers and insurance management services. Users can also access insurance carriers that CoverWallet have already built partnerships with.

The service ensures that small businesses have a simplified process of getting commercial insurance. The API means that third parties can offer CoverWallet’s commercial insurance tools and policies, without making users leave their current site. 

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References

“Insurance and the Open Banking wave: seven use cases”, available at https://www.innopay.com/en/publications/insurance-and-open-banking-wave-seven-use-cases and last accessed 09/23/2021.

“Open Insurance: accessing and sharing insurance-related data”, available at https://www.eiopa.europa.eu/sites/default/files/publications/consultations/open-insurance-discussion-paper-28-01-2021.pdf and last accessed 09/23/2021.

“The Ultimate Guide to Open Insurance”, available at https://insuranceblog.accenture.com/the-ultimate-guide-to-open-insurance and last accessed 09/23/2021.

Thanks for reading!