This article was written by Neeta Mundra, Banking and Financial Services Executive at Salesforce and entrepreneur with experience in scaling start-ups, technology disruption, large-scale transformation programmes and transparency in financial services. Neeta is also on the board of Young Women’s Trust (UK), on the committee of Women in Banking and Finance (Heading the Women on Boards program), Transparency Task Force and a mentor with the Cherie Blair Foundation.
Open Insurance or Open Data is a model/standard that enables insurance industry networks to consume and exchange data through API’s. Data is the backbone and most crucial for making the digital economy success. Millennials’ expectations for real-time easy-to-access information (omni-channel), improved transparency, better return on investment, better control of data and data sharing are driving digital transformations. This has exponentially increased the potential of the data held and managed by insurers.
Similar to Open Banking, Open Insurance should focus on sharing of data with partners, insuretechs, other insurers, re-insurers, brokers,- banks and regulators to build connected insurance ecosystem. With Open Insurance, insurers will be able to exchange and share data with such third parties leveraging secure API’s. Open insurance will enable the insurance industry to standardise and build utility services for processes that are cumbersome and replicated across each insurance company like checks on a prospect. This will reduce the insurers’ operations costs and enable insurers to provide better returns to customers. Insurers have the late adopter advantage and can avoid the pitfalls and adopt the success factors from bankers on open banking.
Key for Open Insurance is being able to provide open API’s, understanding the data, data sources and data flow is crucial. Data management is a strategic priority across the insurance company for Open Insurance. Despite the decrease in technology costs, many insurers still struggle to automate manual processes and move away from paper based data capture which leads to a serious concern in data management. Poor quality data often prevents insurers from understanding their customers better, resulting in poor customer service. Without access to relevant and correct customer information, insurance companies will not be able to provide personalized products and services to their customers. Inability to harness valuable insights is going to impact insurers in the digital economy.
Open Insurance will help insurers collect information from various digital touch-points which, in turn, will help insurers understand their customers better and provide better personalized services, connected products and improved customer satisfaction. With easily accessible, relevant and accurate data, insurers could improve their risk and underwriting process and decision making. Insurers could also tap into new revenue streams to monetize the data (with proper data governance and security) in the form of services. Some of the perceived benefits of Open Insurance are:
Lemonade, a digital insurer is a great example and seems to be leading the path on connected insurance. Lemonade recently made their API’s public so that any insurer can provide insurance in an app. Another good trailblazer is AXA Singapore, who recently launched insurance-as-a-service through AXA’s API, to provide personalised services and build a connected insurance ecosystem. These APIs can be embedded into mobile apps, portals and other digital channels.
While the success of open banking and regulatory demands are the key drivers for Open Insurance, insurers need to start building an organisation-wide vision of understanding data, customer-centricity, data governance, culture of innovation, skilling/re-skilling and infrastructure for open API.
This article was originally published by Neeta Mundra on Linkedin.