The world is increasingly open – and, apparently, this is the new reality for years to come. After Open Banking was launched in January 2021, it is now time to put the same idea into action, focused on the insurance market, through Open Insurance.
Focused on expanding the customer’s decision-making power, these initiatives enable a wider product offering, as it becomes possible to share information among institutions.
However, for this exchange to take place between insurers, each company needs to get user authorization to use their data. Read below for a description of this measure and its implementation phases.
Its definition states that it is a set of rules and actions designed to ensure more openness across the insurance market. If that sounds good in theory, it is even better in practice. Open Insurance is about promoting data security, a wider product offering, lower prices, and above all, innovation.
All this means greater transparency and financial inclusion within this market, since products become more flexible and customized to meet each customer’s needs. Thus, it will also provide greater competition between insurers and a more dynamic insurance market.
For example, when consumers are looking to purchase insurance, they – as the owners of their personal data – will decide whether the data held by company X can be shared and used by company Y in order to receive a better offer that meets their needs.
In addition, Open Insurance should already be linked to the National Financial System (SFN), as is the case with Open Banking, being part of the Open Finance ecosystem, which seeks to integrate several sectors with the aim of providing various solutions for the market.
Thus, in order for all steps to be completed securely and with the best user experience in mind, using APIs in insurance companies is key to Open Insurance strategies, as they guarantee open standardization throughout any process.
According to Susep, which regulates the Insurance market in Brazil, this process is scheduled to take place in 3 phases, scheduled to start in 2021 and end in mid-2022. Each of these phases are described below.
The first act of this proposal should take place on December 15, 2021, which is when major insurance companies will start to open access to their general products information, such as: prices, types of offers and negotiation terms. It is worth noting that customer information will not yet be shared at this stage.
Starting on this phase, using APIs is necessary to connect the interfaces of different systems of the participating societies, in addition to communicating directly with Susep, sending metrics and performance related to service channels, products and services.
The second phase begins over five months later, on May 31, 2022, and involves the exchange of user information by the companies. This means that, with the customer’s authorization, insurer X may request information from insurer Y in order to create a more interesting offer for its product.
In the final phase, which will take place from July 31, 2022, participating companies will be able to start contacting their customers offering products and services focused on improving their consumers’ experience with the institution.
One of the pillars of Open Insurance is ensuring a more democratic and empathetic market with consumers. Therefore, with all the integration proposed by Open Finance, bringing more solutions to people of different situations is part of a more inclusive and open future, in addition to boosting the economic and integrated development of the insurance market.