Introduction to Open Insurance
Open Insurance is an initiative that aims to promote transparency and provide deep integration with insurtechs and insurers to increase innovation and new business models. The initiative empowers the policyholder and puts a focus on technology best practices.
A similar initiative was introduced in banking through the Open Banking regulation in the UK and RDP2 in Europe. The major difference is that Open Banking was enforced through regulation, which mandated banks to provide access to their data. This resulted in widespread adoption and a number of successful platform providers. However, within the insurance industry, regulators have yet to move in this direction. Instead, platform providers will have to convince insurance companies to join their platforms by providing strong value propositions and benefits.
An Open Insurance platform would essentially be a suite of API’s that sets a standard across multiple carriers in terms of access and data models with the aim is to give a policyholder centric view.
This blog outlines these benefits and describes how we will implement our version of Open Insurance.
Why is Open Insurance of interest to insurers?
Open Insurance has the potential to revolutionise the insurance industry and further advance it towards digitisation and new business models. For insurtechs and service providers, an Open Insurance platform will provide a powerful gateway to policyholder data.
There are a number of reasons why insurers should embrace Open Insurance:
Enhanced Customer Experience
By enabling a layer of functionality on top of the policyholder data, created by innovative insurtechs, a customer will have a richer experience.
Improved Digital Agility
For most insurance companies to internally drive innovation and implement new business solutions is difficult and requires a big investment. It often competes with the existing business needs and therefore gets deprioritized. Leveraging an Open Insurance platform gives you and your technology partners a foundation for digital transformation.
Best in class APIs
Open Insurance opens up the opportunity to provide revenue generating API’s, additional functionality such as analytics and reporting as well as a standard integration point for existing partners. By leveraging a well designed API with strong documentation for policyholder data, the approach can easily be widened to include other functionality.
An API driven approach allows insurers to easily integrate and collaborate with third-party providers of data and services to enrich their own products. Within Open Banking, we have seen use cases for property tenancy reference checks, credit scoring and budgeting being implemented by companies outside the bank who utilize the platforms.
New Business Opportunities
Although Open Insurance will allow insurers to easily share the policyholder data, it is important to remember that an insurer also is able to consume data from other insurers and providers. This enables insurers to bring in complementary datasets to create new products.
Who would use Open Insurance?
Companies who provide insurance solutions are a major target audience for an Open Insurance platform. The ability to integrate to access policyholder data in a standard way will make developing a solution quicker and easier.
As described above, there are strong benefits for an insurer to integrate with Open Insurance. In addition, the insurers themselves might be consumers of Open Insurance APIs, creating a more holistic view of a policyholder and merging non-insurance related data with their offering.
What is the motivation behind Beyond Open Insurance?
We have been working on a quote and bind focused platform which mainly addresses the internal processes of an insurer or broker and the integration with their partners. As the adoption of such a platform would mean replacing large parts of their existing IT solutions, there is an inherent resistance due to the intrusiveness and potential loss of jobs. An Open Insurance integration would be more of a complement to existing systems. We decided to adapt our platform to support the Open Insurance specification and aim to become a leading provider in the space. It is worth noting that the Beyond Insure platform is already closely aligned with the functionality and approach of Open Insurance, with the main difference being a stronger focus on the public APIs.
We believe that Open Insurance will gain significant traction over the next two years. As more and more insurers provide integrations, it will become an inevitable part of the insurance landscape.
How does Beyond Insure do Open Insurance?
The current Beyond Insure functionality is already aligned with the scope of Open Insurance. The main difference is that our API’s that have been supporting the UI are now becoming first-class citizens and the actual product. We will still provide a UI for account management and data exploration, but the primary method to interact with Beyond Insure is through its REST API’s.
Our first version will include API’s for the following:
Identity API. The identity API allows authentication and authorization for a policyholder by the insurer through OAuth 2.0. We are exploring OpenId and various other methods too.
Enquiry API. This is all information that a policyholder submitted when applying for insurance.
Policy API. All the details about a user’s policies including the ability to quote and bind. This API also provides the transactions and adjustments to a policy.
Product API. Provides a catalogue of carriers and intermediaries.
Data API. Provides third-party / open data as well as monetized data provided by the policyholder.
After this, Reinsurance and Retro would be added as they become available.
How much does it cost and how do we charge?
An API driven platform lends itself really well to a tokenized charge model, where API calls are priced as IXT amounts and charged from a credit balance associated with the caller. In our case, a platform account would be required to hold an IXT balance, purchased directly or indirectly which will be used for charging.
As an example, to call GET: /policies/123ABC the caller would be charged 10 IXT. The prices would be adjusted to cater for potential increases in the IXT price.
We are very excited about this new direction and strongly believe it will provide a new and wider opportunity for us. We have already started the outreach to potential partners as well as regulatory sandboxes to open up conversations. We will keep you updated on the progress over the next few months.