How to Overcome the Challenges of Open Insurance
In my last blog, I explained what Open insurance is and what it has the potential to do. But nothing is perfect, so let’s look at how to deal with some of the challenges Open Insurance can bring.
Insurers need a partnership mindset. They are understandably uneasy about sharing data. The best strategic move is to get ahead of the curve. That means collaborating on the new and innovative areas of open insurance, developing new value propositions and additional revenue streams to ride the wave rather than drowning in it.
A second hurdle is the design point of on-premise legacy systems. They were never intended to handle multiple fluid partnerships and ecosystems. A technological transition towards cloud based open systems is a fundamental requirement for progress.
What tools can insurers use to supercharge their ‘open’ strategy?
- Implement an API-enabled, data-rich (open) architecture that simplifies rapid data exchange
- Introduce a new layer of decoupled components (but don’t go too granular!)
- Adopt a cloud-first strategy, which reduces time-to-market and offers the ability to scale securely as well as better prospects for future portability
- Open up for third parties and user-led ideation. APIs need to be relevant, discoverable and easy to use. Coarse and fine grained!
- Focus on modern and powerful API management technology
Where will Open Insurance be in 2025?
Massive Increases in data volumes, mobile interfaces, and the growing power of AI are all drivers of significant change. Use of digital technologies in everyday life has become the new normal. And it’s our everyday experience that the insurance sector is lagging behind other industries in terms of digitalization.
A recent McKinsey report indicates that Ecosystems will account for 30 percent of global revenues by 2025. That’s surely a threat to the whole insurance industry since today insurers act primarily as risk aggregators with a passive and sporadic relationship with customers, and therefore are very vulnerable. But there’s no reason why insurance companies can’t constitute their own ecosystems and marketplaces, as Ping An are doing. As long as they have the right technology partners alongside with common interests!