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