Large insurance companies are lagging behind in adopting open insurance, although the number of challengers in the landscape continues to grow. This is the result of a new study by the management consultancy Innopay.
In the footsteps of Open Banking, Open Insurance is quickly becoming a trend in the insurance scene that cannot be overlooked. Although there is no generally accepted definition of open insurance, the European Union defines the phenomenon as “the exchange of insurance-related personal and non-personal data”, which is usually done through APIs.
Similar to the banking industry, some of this data exchange may result from regulation requiring explicit consumer consent (similar to the approach in PSD2), but several initiatives to exchange information between different players in the insurance market are also possible without this express consent.
According to Maarten Bakker, partner at Innopay, the advantages of open insurance are many. “It is an important building block for insurers to better serve customers, maintain future relevance and develop new business models.”
A growing number of young, agile and digital-first players in the insurance industry are taking advantage of these opportunities. The number of these companies, known as insurtechs, are “quickly picking up speed” according to the latest Innopay Open Insurance Monitor that have entered the open insurance landscape.
The monitor tracks the landscape and technological maturity and finds that the number of actors offering access to insurance data, products and services is increasing and accelerating. “In the past few months, several new players, both insurtechs and open insurance marketplaces, have expanded with insurance API offerings,” said Mounaim Cortet, Senior Manager at Innopay.
Meanwhile, the traditional players in the industry – established insurers and banks – seem to be lagging behind. Bakker: “They don’t seem in a hurry to bolster their current weaker position in order to capitalize on the value of open insurance.”
Falling back is associated with risks, because “open insurance policies are the key for insurers to ensure their business continuity and strengthen future relevance,” noted Cortet. As a result, “now is the time for insurers to rethink their strategy for opening up their business and developing the skills necessary to capitalize on the digital ecosystem.”