The insurance landscape is going through fundamental changes. In this series, we offer bite-size insights into the possibilities brought by innovations in the insurance market. In part one, we focus on ‘what is Open Insurance’.
What is Open Insurance?
Open insurance is at the intersection of insurance, technology and data. It revolves around open API architecture, gaining, sharing and collaborating with data to produce new services and propositions. While this sounds innovative, ‘open insurance’ is not entirely new. Throughout Europe and across industries there are many examples of publicly available shared databases. Think for example of motor vehicle, fraud, or property registries. These databases have helped power insurance companies for decades.
So, what is new? We are seeing three main shifts that take Open Insurance technologies to a new level of maturity, thereby changing the business possibilities:
1) Increasingly, Open Insurance is commercialized by private companies whereas historically governments were the primary aggregators
2) The amount and frequency of actionable data is increasing exponentially
3) The willingness to share (or sell) data is taking flight: if information is power, then more information equals more power
Looking at an insurtech example
One example where these changes can be observed is VanderSat, a provider of global satellite-observed data. VanderSat ranked third in the ‘Rising insurtechs driving innovation across insurance’ study. Going back to our three shifts we see that:
1) VanderSat commercializes data generated by government institutions like NASA & ESA
2) The data is made available on at least a weekly basis, near real-time and covering an agricultural area larger than Germany & France combined
3) VanderSat sells this data to larger (re-)insurers
Just a decade or two ago, this data would not be publicly available. It would have been available only for selected spots, in segregated systems, and (at best) on a yearly basis. In other words, not suitable for commercialization.
How will open insurance change?
We note that while open insurance is widely regarded as a disruptive technology thus far, at least as observed in the Dutch market, the changes are more evolutionary than revolutionary in nature. There is a distinct possibility this is about to change. There is an enormous inflow of data talent, data is a top strategic theme and the business possibilities are emerging more rapidly than ever before. History shows that such factors, more often than not, combine to cause disruptive change.
Open insurance begs risk specialists, product managers and C-level innovators in the industry to ask the following questions: What sources of information do I have at my disposal? Which sources should I have access to? How can I use them to minimize risks, price products better, handle claims and/or open up new markets? Which unicorns and promising gazelles do I partner with to develop my offering? And, perhaps more fundamentally, who do I partner up with? How do I attract the specialists that can bridge the gap between the conservative insurance business and the Open Insurance innovations that are rapidly becoming available?
Would you like to explore these questions and dive into advice, insights and data analytics? You can reach out to Martin Holm, senior manager insurance at IG&H. In part 2 we look at which other Dutch Open Insurance initiatives are topping the list of ‘Rising insurtechs driving innovation across insurance’ and what we can learn from these innovators.