Technology has always been a driver of the insurance industry, but recently, the pace has accelerated. Insurers face constant pressure to adopt new technologies to remain competitive. Many turn to business intelligence solutions to gain a better understanding of their customers, their risks, and the marketplace – but is looking inward the only answer?
It might surprise you to know that for many policy providers, a more open approach is the solution. Here’s how Open Insurance is changing the industry – and how to keep up.
What Is Open Insurance?
Open Insurance is a community-driven technology standard that allows policymakers to share their data with their peers and other service providers to explore new business practices. This facilitates the development and delivery of insurance products that are more transparent and affordable than traditional models. When done properly, it also offers customers more control over their coverage.
How Are Companies Already Using Open Insurance?
We’ve all been there. You submit a claim to your insurance company and wait. And wait. And wait.
Finally, you call – only for the waiting to begin again. Fortunately, there’s a new generation of startups using Open Insurance data to make the claims process more efficient and effective.
For example, in 2017, home insurance company Lemonade launched with a mission to disrupt insurance by streamlining claims, providing flexible cancellation terms, and diverting unused premiums to charitable causes. After raising an initial $480 million in funding, Lemonade grew to serve nearly one million customers by the end of 2020.
Lemonade is not alone. Several startups are using open data to build innovative new insurance products, like the UK-based company Brolly, which uses data to help customers understand their insurance policies. Customers can upload photos of their policies, and Brolly will analyze the data and provide a report with recommendations.
Another company, Trov, offers on-demand insurance for specific items. For example, if you’re going on a ski trip, you can insure your skis for the duration of the trip.
Open Insurance empowers these kinds of unique solutions by making it easier for insurers to investigate alternate business models and novel practices. For instance, companies can more easily explore new markets without having to gather their own data or struggle through costly trial and error.
What’s on Deck for Open Insurance in 2023?
Open Insurance will continue to build on its successes in the coming years, expanding its reach and impact. Open Insurance will also continue to develop its resources and capabilities, including its website, data and analytics platform, and educational materials.
So what does this all mean for insurance companies that want to get on board? One of the most important things to remember is that Open Insurance goes beyond national boundaries – and that any solutions you devise need to work seamlessly no matter what data they interface with. In other words, API management is a critical aspect of Open Insurance.
Application programming interfaces (APIs) are programming libraries that let different programs share data and interact digitally. They play a vital role in Open Insurance by standardizing how companies share internal data at scale, disseminate public-facing information, and provide endpoints that help apps function in real time.
APIs help companies build scalable applications and integrate completely distinct business tools, making them a lynchpin in digital systems. Companies that want to leverage Open Insurance will need to ensure they create APIs that make their microservices and software tools as useful as possible. For instance, it’s usually smarter to avoid creating monolithic applications in favor of building smaller sections that work independently and provide their own distinct API endpoints.
Open Insurance has a lot of potential to change the industry for the better.
