On the wave of change that invested the banking world and brought to Open Banking, the insurance ecosystem is opening up to external players as well and it is adopting a partnership-oriented approach to increase the value of the offer dedicated to the new digital consumer.
Federico Soncini Sessa, CEO & co-founder of Mia‑Platform, talked about it during the first edition of the Insurtech Day, the reference event for the insurance sector promoted by the Italian Insurtech Association and Forbes, which was held in Milan on June 8th, 2021. It is now clear that the evolution of the insurance world towards Open Insurance is not just an opportunity to be seized, but an inevitable change that insurance companies must be ready to face.
To ride this paradigm shift, insurance companies will need to acquire adequate tools to ensure maximum interoperability with external ecosystems (banking, automotive, retail, energy, IoT, healthcare and many others) thanks to the opening of standardized insurance APIs.
Omnichannel, Data-Driven Propositions, Open Insurance: the insurance world is constantly evolving
The transition to the Open Insurance paradigm is part of a period of great changes that the insurance world is going through. The main ones are:
- The evolution from the simple sale of insurance products to the supply of complete and personalized services, also thanks to the integration with external partners and providers that enrich the insurance offer. It is estimated that in 2021 there has been a 30% increase of non-sector operators offering insurance products to supplement their offer compared to 2020. This is also called Embedded Insurance;
- The maturity of the digital consumer, the one who regularly purchases goods and services online, which today in Italy corresponds to approximately 31% of the population, and is estimated at 82% in 2030 and 100% in 2040;
- The customization of the insurance offer (see, for example, micro-policies and Direct Insurance), thanks to which the insurer is able to establish a direct and immediate relationship with its customers, also thanks to new digital tools;
- The strengthening of the omnichannel strategy that turns towards the technological integration of all available sales channels, both personal and partners’: banks, intermediaries, brokers but also non-insurance and Insurtech players. In fact, the various evolutionary trends in the insurance sector were accompanied by an increase in investments and activities started with Insurtech at a global level.
In particular, there is a sharp increase in the number of Insurtech startups, which in 2021 are about 1,200 worldwide (in 2014 they were 574). Furthermore, in 2020, global investments in the Insurtech sector increased by 12% compared to the previous year, for a total value of 7.1 billion dollars.
New (and old) challenges for the insurance sector
To successfully evolve towards the Open Insurance paradigm and take full advantage of its opportunities, it is necessary for insurance companies to efficiently address the main challenges related to business digitization and interoperability with external actors. We will mention a few:
- Fragmentation of data in different management systems, poor communication between data silos;
- Slow and expensive integration with external partners;
- Overloading of security systems, especially when opening APIs to third parties;
- System of Record overloading, due to the growing number of active touchpoints as part of an omnichannel strategy;
- The need to accelerate the development of new digital skills in the company.
"The key to managing the new changes and related challenges is the adoption of technological solutions that allow insurance operators to create and launch new services on the market with a winning time-to-market, bridging the digital gap that is created between business challenges (omnichannel, interoperability, integration) and company management systems " said Federico Soncini Sessa, during his speech at Insurtech Day."At Mia‑Platform we have developed an interconnected digital platform that enables the transition to Open Insurance, allowing maximum interoperability with third party systems and ensuring flexibility, scalability, speed of execution and efficient data management ".
Open Insurance: the future of the insurance industry
Since customers increasingly demand quality, custom, and quick services, in a constantly evolving market in which companies interact with insurance and non-insurance players, the ability to create interconnections in an easy and fast manner becomes a decisive competitive advantage.
Similarly to the evolution that has affected several markets in recent years, in the insurance sector the debate has also arisen whether to standardize APIs and expose them to third parties, to increase interoperability with external partner systems and provide insurers access to open innovation and new business models.
By embracing the Open Insurance paradigm, insurance companies can increase the flexibility, scalability and time-to-market of new digital services in line with the ever-changing needs of the consumer.
To address the evolution towards Open Insurance, Mia‑Platform proposes a platform approach that provides an intermediary layer between the System of Records and the channels, which lightens the underlying systems to allow efficient data management.
In fact, maximizing interoperability may not be enough to make the most of the potential of Open Insurance. It is essential to ensure maximum modularity of the data, which must be available 24/7 in real-time to all ecosystem players. To do this, Mia‑Platform has designed a flexible and scalable platform dedicated to the insurance world, which is capable of:
- collecting data that are distributed within the System of Records;
- aggregating data according to business logics (for example policies, events, assets, subjects, points of sale);
- making data available on the basis of predefined authorization levels to partners and customers;
- analyzing data through Business Intelligence systems.
You might want to modularize not only data, but also the single functionalities or microservices of the platform, which can be designed, used and combined as building blocks to compose processes in a coherent way, integrate new partners in record time and deliver new services and propositions with a winning time-to-market. Eventually, you should aim to adopt the Composable Enterprise paradigm.
Basically, we can imagine an insurance company that needs to integrate a Tour Operator which wants to enrich its offer by selling tailor-made insurance products for travelers. Thanks to a platform approach, the insurance company can quickly integrate the new partner with its own systems (e.g. Life, Non-Life, ERP, Claims, CRM) composing the microservices in a flexible and personalized way, and sharing data in real time, on all channels, and 24/7.
After the APIs have been exposed, the set of components is built in little bricks including all the activities that will allow the Tour Operator to sell the insurance product to its customer from the IDD for customer identification, to the Estimator for the calculation of the policy, to the FEA to carry out the advanced digital signature, to the Payment Gateway which processes the payment, to the Document Management which inserts the policy stipulated on the document systems, up to the BI Connector which allows the sharing of data with Business Intelligence systems for analysis.
Thanks to the real-time data sharing on all partner channels, the customer will always have the possibility to securely access the data of his/her policy, at any time and from any place.
Similarly, if the insurer wants to start a new integration project to activate a health policy that offers a teleconsultation service that can be booked via app and website, the company will only need to integrate with new partners (such as the teleconsultation service provider and the National Health System), reusing the microservices already in use on the platform, and adding the necessary components according to an incremental logic.
With this approach, companies can build their digital insurance platform step by step and tackle old and new challenges quickly and flexibly.
Read the case studies to find out how these large groups have built their digital platforms for their insurance transformation.
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