Learning the ecosystem lessons

Insurance Insights | Robert Anderson |
09 November 2023

Bringing together an ecosystem of partners brings exponential value to consumers and to operators. From new revenue streams, to the tracking and analysis of wide-ranging data, and the creation of new services and value, they’re a way to spur innovation sustainably. A solution to keeping in step in the fast-paced tech world.

Generating benefit

Ecosystems include digital and technical systems but also explicitly include organisations, people and their relationships. In practice this means multiple participants are working together to generate benefit for all but especially for their customers.

Insurance can learn a lot from retail and also from banking when it comes to ecosystems. Amazon is the ultimate example. Since 2000, it has continuously expanded its digital ecosystem to not only incorporate multiple providers but also to sell own brands, including Amazon Prime, Prime Music, Amazon Echo and Amazon Pay, which allows a user to pay via Amazon on third-party platforms.

This model could be transferred to automotive, healthcare and homeownership, boosting opportunities for insurers. In automotive, car manufacturers, insurance companies and maintenance and repair shops could form an ecosystem. In healthcare, health insurers, health technology companies and medical providers can provide added value to each other and their customers through association. In real estate, homeowner’s insurance, home security and home repair suppliers can form a home services ecosystem.

Open insurance and open APIs

The prerequisite for these ecosystems though is the easy exchange of data between all participants. One mechanism that enables this is open insurance, a set of agreed standards for data exchange that is open and can be used by anyone within the industry and wider ecosystem. Open banking is already commonplace and has an established standard of how application programming interfaces (APIs) must be designed so that any participant is able to exchange data with banks, allowing new services to be quickly available. It has revolutionised banking, providing consumers with greater access to a range of financial services, boosting competition and innovation, and allowing for multiple different products to be delivered, faster.

There are still a number of hurdles for insurance to overcome to achieve the same progress as banking though. Proprietary systems, a lack of industry standards and legacy technologies hinder the data exchange that is necessary for open insurance. Regardless, we encourage you to get ready for this coming change, not only because it’s beneficial for you to do so but because regulation may develop into an industry standard in the near future.

Although we haven’t seen many early adopters of open insurance so far, we see our customers adapting their technologies according to its principles. They are starting to take an API-led approach to data exchange and to work with centralised hubs and portals. New ways of creating risk models are also evolving with the automation of the claims journey. Third parties are becoming increasingly technologically capable. According to Statista, in 2021, there were just over 15 million open insurance users worldwide. It is forecast that by 2032, there will be more than 812 million users globally.

Open advantage

For open insurance you need technology that connects. You become part of a new ecosystem with more transparency and with a focus on constant technological development. Early adopters will be able to spontaneously connect partners, such as startups and gain access to new types of issues and business models. This being open is also a matter of cultural, not only technological transformation.

APIs already exist within the industry, but open insurance approaches make these APIs available to external partners as well. The necessary infrastructures are therefore already largely in place but standardisation is needed to develop an open insurance ecosystem.

Whenever you design new features for users think about the required integrations for the backend system. APIs make standardisation much easier. Working with open APIs creates new possibilities for collaboration and enables partners to connect quickly, making it possible to test new features with less risk and effort and to enter new markets through low-threshold cooperation.

Creating everything that open insurance promises; higher revenues, more efficiency, new business areas and new customer groups will require the industry to develop common standards for working together. Making information exchange with partners easy is an enabler for new initiatives and for bringing new products to market with relative ease and creativity.

This blog is a synopsis from our latest report Staying Relevant in Personal Lines Insurance, and is based on insights from insurers and looks at customer expectations, marketplace convergence and technology choices. For more insights download the full report here.

Robert Anderson

Principal Architect

Robert is an enterprise architect with 20+ years of IT experience and Endava’s principal architect for the insurance industry. His focus is on emerging IT trends, specifically those supporting customer experience, and ensuring that business objectives are met through strategic architecture. Robert has a proven track record of driving change through the adoption of best practices and industry standards. In his spare time, he is a photographer and has had his photos published in magazines, newspapers and photography sites around the world.

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