In the footsteps of open banking, open insurance is rapidly becoming a not to overlook trend in the insurance scene. Whilst there is no universally-accepted definition of open insurance, the European Union defines the phenomenon as “the sharing of insurance-related personal and non-personal data”, which usually is done via APIs.
Similar to the banking industry, some of this data sharing can follow from regulation that prescribes the explicit consent of consumers (much like the approach in PSD2), however, there are also several information sharing initiatives possible between different insurance market players that can take place without such explicit consent.
According to Maarten Bakker, a partner at Innopay, the benefits of open insurance are multifaceted. “It forms an important building block for insurers to better serve the customer, maintain future relevance and to develop new business models.”
Tapping into these opportunities are a growing number of young, agile and digital-first insurance industry players. Known as insurtechs, the number of such companies that have entered the open insurance landscape “is rapidly taking off” according to the latest Open Insurance Monitor from Innopay.
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The Monitor keeps track of the landscape and technological maturity, finding that the number of players offering access to insurance data, products and services is on the rise and accelerating. “In the past months, several new players, both insurtechs and open insurance marketplaces, have expanded with insurance API propositions,” explained Mounaim Cortet, a Senior Manager at Innopay.
Meanwhile, traditional industry players – incumbent insurers and banks – seem to lag behind. Bakker: “They seem to be in little rush to strengthen their currently weaker position in order to capture the value from open insurance.”
Falling behind comes with its risks, because “open insurance holds the key for insurers to safeguard their business continuity and strengthen future relevance,” remarked Cortet. As a result, “it is now time for insurers to start thinking about their strategy to open up their business and to develop the required capabilities to leverage digital ecosystem.”
Source: Consultancy EU