Almost every industry is going digital and the same can be said for the insurance industry as well. As a result, every insurance carrier is now looking for ways to capitalize on the prospect of entering a digital ecosystem and reaping multiple benefits from it. Such ecosystems can help develop new businesses and attract more and more customers as a direct result of them.
This is where the concept of Open Insurance comes into play, as it is one of the best ways to become an ecosystem business. Let us get a better understanding of what this is and the emerging opportunities it offers.
What is Open Insurance?
Open insurance is a new way of doing business where insurers share data and services with other startups, companies, partners, and industries, which enables you to build new applications, services, and innovative business models. It also helps you in creating new revenue streams, which is not the case with the insurance industry in general. Most importantly, open insurance allows you to build a strong relationship with your customers and engage with a much bigger audience.
Importance of API in Open Insurance
The most important aspect of open insurance is that of APIs (Application Programming Interfaces) because they enable the carriers to open their data, algorithms, and processes to everyone involved in the ecosystem. Subsequently, it enables the partners in the ecosystem to build on these resources available to them and come up with new services for consumers. In a nutshell, API helps everyone in the flow system to stay connected in an efficient and cohesive manner.
How should Open Insurance work?
If open insurance is to work in the best possible way, it must address the three vital tasks of a data enterprise – consume, share and collaborate. By following this model, many banking ecosystems have already gained a lot on revenue in the recent past. What started as a practice by small and new banks has now become a norm in many countries, and is now being adopted by traditional banks as well.
While it is the data regulations that have triggered this movement in the banking sector, it is the sheer amount of untapped possibilities and opportunities that are drawing insurance carriers to go open. Almost two-thirds of insurance carriers hope to do a complete overhaul of their business model in the next five years by adopting an open insurance platform and be part of a big digital ecosystem.
In this pro-digital era, consumers expect to get full access to their details through digital services. Insurers such as Groupama, Lemonade, AXA, and Zurich have already come up with their digital ecosystems by partnering with various other business entities to deliver personalized customer-centric services.
Benefits of Open Insurance for Carriers
- Improved and effective customer propositions – Insurance carriers can now leverage the huge real-time data-flow coming in from the open insurance system and offer new offerings to customers. Now, carriers can deliver personalized and on-demand services with variable pricing. Furthermore, it directly translates to better relations with customers. In fact, it can very well become a give and take relationship, where customers give carriers data, in exchange for better offerings and prices.
- New partnerships and distribution models: With new partnerships comes new possibilities. As a result, carriers can now open their wings, thanks to the bigger market in hand, and make strategic partnerships to launch various products and services. With more customers and services, the network automatically gets bigger and the “network effect” comes into play, enabling the carriers to build new partnerships and distribution models.
- Extra source of revenue: By sharing the data they have accumulated, they can easily monetize this trade and earn big amounts of money. This also enables them to release the value that’s trapped in their businesses. Furthermore, by partnering with efficient service providers and providing delightful offerings, one can increase the customer retention numbers as happy customers tend to stay in a system for a longer time than otherwise.
- Improvement in Operations One of the biggest advantages of an open insurance ecosystem is that it speeds up most of the involved processes. The product innovation is at a much faster rate with the primary focus on design, development, and distribution of products. Such operational improvements automatically cut down costs, benefiting the whole of insurer’s value chain. Note that the better the collaborations are; the more will be the savings.
Emerging Opportunities with Open Insurance
The insurance sector should look up to see how the banking sector has gained multiple benefits with the help of digital ecosystems. Insurance carriers should tap into innumerable opportunities by using plug-and-play integrations and APIs and thus improve the business offerings in a way that boosts their customer base.
The carriers who will fail to embrace this new ideology will lose out on many opportunities and end up being left way back in the global business race. The top bracket of the insurance companies has already started investing in such ecosystems to get a deeper knowledge about the possibilities of developing a digital ecosystem.
To get the best possible results in this new venture, you will have to invest in various automated digital solutions and choose the right business partners to form meaningful collaborations. To get the best digital solutions, check out our website, and explore our different offerings.