Open business models based on APIs have transformed many industries for some years now, enabling new business models and enhanced customer experience. The move towards openness and data sharing seems to be a trend that is here to stay and the exchange of data through open APIs has also started to arise in the insurance sector.
In times of changing customer behavior and new technologies, insurance companies need to adapt and be agile, connect to relatively complex ecosystems and exchange information with a large set of partners. In addition, the insurance companies need to interact with customers in a variety of digital channels.
We wanted to check the pulse of the industry and explore how insurers can unlock new business value to better serve customers through Open insurance. Lumera Pulse survey was sent to 1 500 recipients working in the Life & Pensions industry in the Nordics. Below we present the result of the survey.
In the future, insurance companies will have to operate outside the boundaries of the insurance industry, as we know it today. They must also be willing to tap into data that can be found in other nearby ecosystems. According to the survey, the most important benefit of Open insurance is innovative customer propositions. Therefore, processing a vast amount of data with new technology like AI, cloud and big data means that insurance companies can serve customers with more relevant information and more personalized products.
In times of changing customer behavior, insurance companies need to adapt and be agile. However, operating in a slow-moving industry with fast-paced customers is a big challenge, according to the survey. Even though Open insurance can unlock an enormous innovation potential, it also gives rise to other challenges such as heavy regulation and risks of sharing data, which can lead to broader consumer protection issues.
Our conclusion is that it’s evident that the exchange of data through open APIs has started to arise in the insurance sector. 39 % of the participants have started to adopt Open insurance. For those who have not, the best integration strategy, according to the survey, is to implement an API platform, start to engage with third parties and adopt a cloud-first approach.