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What is Open Insurance?

July 19, 2022

Open Insurance refers to the opening of an insurer's resources (data, offers, infrastructure) to third parties. Modeled on the Open Banking model, this system facilitates the establishment of new partnerships - with insurance companies or non-insurance actors - and incorporation into ecosystems. It makes it possible to create innovative services and rethink distribution. It is therefore the constitution of new economic models that is at stake for the sector. Open Insurance is made possible by the use of APIs.  

An API, how does it work?  

API is the acronym for Application Programming Interface. In concrete terms, the API allows two foreign applications, A and B, to communicate. Even if they have not been programmed in the same language, they can simply interact in a secure environment.  

APIsation must be imagined as a brick system. A customer has the opportunity to connect to this brick. He then benefits from the service in a simple and transparent way. A brick can be an insurance product, but many other things.  

The advantages of APIs are numerous for insurance professionals. By facilitating the design, use and administration of products, they provide them with this flexibility, which is now a key to innovation. They also allow them to integrate very simply these famous ecosystems that represent the future for many.  

Open Insurance and Open Banking, what are the differences?  

In 2018, the entry into force of PSD2 (Payment Services Directive) requires banking organizations to open their customers' data to third parties. Rather than considering this standard only as a constraint, banks decide to see it as an opportunity as well. Open Banking then leads to a redefinition of their role in an expanded banking ecosystem with the emergence of fintech and the activation of innovative services.  

The big difference between Open Banking and Open Insurance lies in the regulatory aspect. Insurers are not subject to any obligation to share their data. On the other hand, they have clearly identified the new possibilities opened up by APIs. After the time of reflection now comes that of action. Open Banking can also be a real source of inspiration for insurers, especially those who place themselves in an "as a service" logic.  

Open Insurance offers a universe of new possibilities for insurers. In the digital age, it simply represents a lever of innovation for professionals in the sector. They thus have an opportunity to reinvent themselves by reviewing their positioning in a changing value chain. Open Insurance imposes crucial questions on positioning.  

One of the main consequences of digital transformation lies in the change in uses. Better informed and having access to a multiplied offer, the consumer of the 21st century displays new needs... and new expectations. Open Insurance makes it possible to design tailor-made, digital and flexible offers that fit perfectly into a global and modern customer experience. Insurance is no longer simply synonymous with protection, but also with service.  

 
Integration with new distribution devices -While agencies and brokers still have a say, digital has nevertheless revolutionized the way insurance products are sold. Whether through 100% digital brokers such as Insurely, partners who integrate insurance into a global offer of products or services, or through emerging marketplaces, distribution is clearly changing its face. And Open Insurance is the most appropriate answer to this new situation.  
 

Unlocking the potential of open data. The coming years will be marked by a rediscovery of the power of data. In a sector like insurance, built around statistics and databases, data - and how to exploit it - takes on its full importance. Indeed, the crossing of insurers' legacy with public data opens doors. Optimizing the data recovered through IoT in risk assessment is also an asset to consider. Used wisely, this data should allow insurance professionals to offer innovative services, whether in prevention or in the development of offers that will best adapt to the needs of the new world (climate change, cyber risk, pandemic, etc.)  
 

Although recent, the concept of Open Insurance is already identified as extremely promising. In a sector where digitalization is increasingly synonymous with survival, initiatives of this type are expected to multiply at high speed in the near future. The obvious is now obvious to everyone: Open Insurance will make a very strong mark on tomorrow's insurance.  

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