Open insurance – not if, but when
The move towards openness and data sharing seems to be a trend that is here to stay and most likely extend beyond banking. There are initial indications that the exchange of data through open APIs has also started to arise in the insurance sector.
Open business models based on APIs have transformed many industries for some years now, enabling new business models and enhanced customer experience. Open Banking is one example, which refers to the free movement of financial information between banks and authorized third party providers (TPPs). This new directive came into force in 2018 through the introduction of the Second Payment Services Directive (PSD2), which was formed to further improve Europe's payment services for the benefit of consumers and businesses.
EIOPA launches public consultation on open insurance
Last week, the European Insurance and Occupational Pension Authority (EIOPA) launched a public consultation on open insurance, with focus on access to and sharing of insurance-related data. EIOPA raised questions on whether insurance value chains should be opened up by the sharing of data amongst insurance and non-insurance firms, to protect customers’ rights and to allow for innovation in products and services.
Some of the main questions raised by EIOPA were:
A main consideration for open insurance solutions is finding a balance between regulatory objectives related to data protection, insurance, and competition while supporting innovation, consumer protection and financial stability, according to EIOPA.
Open Insurance – benefits and risks
The main concept of Open Insurance is to establish a set of standardized services and data definitions to be used by insurers, startups, Insurtechs and other organizations. This in order to help simplify and accelerate innovation and creation of new services, insurance products, applications and business models. It is the combination of open API architectures embedded in insurance applications. This could unlock an enormous innovation potential, but also give rise to risks such as data security, cyber risks and broader consumer protection issues.
In times of changing customer behavior and new technologies, insurance companies need to adapt and be agile, but are they ready to start experimenting in the open with third party insurtech companies and work on standardizing their effort today?
Inca Connectivity Framework
Itello is driving standard development forward in the Life & Pensions industry by creating a futureproof system for policy administration with standardized interfaces and APIs. Inca (Connectivity Framework) allows L&P providers to engage and interact with stakeholders in a swiftly changing L&P industry landscape, exchanging relevant data and processes in an agile and secure way. It enables them to generate customer value and adapt to, and take advantage of, changing and new business models. The open interfaces jointly develop opportunities for automation and digitalization, covering the specific needs of the industry.