VERTONE Blog – Open Insurance: The beginnings of a new diversified and personalized insurance model?

VERTONE Blog – Open Insurance: The beginnings of a new diversified and personalized insurance model?


Open Insurance, that is to say the opening of data and resources of insurers to third-party services, remains until now a fairly theoretical concept with traditional market players. Despite everything, initiatives are starting to emerge and insurers are increasingly interested in this dynamic, seeing many opportunities.

Unlike banks, insurers have not had to undergo the regulatory pressure imposed by the PSD2 on the opening of bank data. As a result, the insurance world has been a spectator of this regulatory imperative which has required banks to make heavy investments and deep structural changes within their information systems. Insurers only became interested in Open Insurance later, attracted by the potential benefits of opening up the current model.

VERTONE deciphers for you the challenges of Open Insurance, the possible repercussions on traditional players in the sector, as well as the changes to be expected in the insurance value chain.

An insurance market shaken by the advent of AssurTechs

The rise of AssurTechs is one of the catalysts of this dynamic of Open Insurance. These native digital companies specializing in a type of risk are aimed at customers who want novelty, simplicity and transparency. They attract a large number of clients, mainly young people, and in fact entail a risk of natural and gradual aging of the portfolio of traditional players.

French players like Luko (Insurance and protection of homes), Alan (Health insurance), Shift Technology (Automation of claims management, detection of fraud cases via artificial intelligence) are growing year after year by raising funds. ever more important. More than 200 M € were raised in France in 2020, an increase of 12% compared to 2019. These AssurTechs offer innovative services, a better user experience and attract hundreds of thousands of customers: Luko and Alan already have more than 100,000 and 140,000 customers respectively.

French players are not the only ones to experience remarkable growth. International AssurTechs such as Lemonade or Zhong An compete with traditional insurers.

Lemonade is an American AssurTech created in 2015 which has been deployed in France since December 2020. It offers home insurance online and without commitments. It went public on July 2, 2020, has more than a million active clients and is valued at more than $ 7 billion.

As for Zhong An, it represents the most dazzling success in the sector of AssurTechs. Co-founded by Tencent, Alibaba and Ping An in 2013, this AssurTech has a market capitalization close to $ 39 billion. It has nearly 500 million active customers and offers hundreds of different insurance policies geared towards low and quick coverage involving low premiums and covering many industries.

The growth of these new digital players on the market is forcing traditional players to position themselves and to put in place a digital strategy of openness with third parties: a real breakthrough innovation from the traditional insurance model.

An essential technological upgrade

A l’instar de l’Open Banking, this trend of opening up products and services is based on a technological API base that allows controlled and secure data exposure but above all facilitated integration.

Traditional players must therefore strive to upgrade their often aging information systems, most of which operate in silos. The latter do not or little allow cross-functionality of information and a fortiori, communication with third parties. Insurers must then develop a strategy for technological upgrading in line with their ambitions of openness.

This API technological base represents many advantages, in particular a Time To Market shorter but also a very important economic lever.

To illustrate this technological imperative, take the example of the Chinese insurance company Ping An, world number 1 in insurance. This insurer decided several years ago to invest massively in the migration of all its activities to the Cloud and thus to create a hub made up of APIs allowing third parties to connect to it, to consume their services and to ‘have access to nearly 200 million Ping An customers. This titanic project has enabled them to acquire an enormous competitive advantage.

Consume, Exhibit… What strategy to adopt with Open insurance?

Open Insurance has many similarities with Open Banking, in particular, when it comes to strategic axes around the Production / Distribution model. These two strategies are complementary and the construction of a data opening strategy must take into account the advantages and disadvantages of each of these models.

# 1 – An “As a Platform” API consumption strategy

In an API consumption strategy “As a Platform”, the traditional insurer distributes, through a platform that it controls, a range of heterogeneous products and services made up of its own products, but also of products or services. third-party actors aggregated by API. For example, MAIF has launched its multi-service platform Nestor, the aim of which is to aggregate the finances of its customers, beyond insurance products.

With this approach, the insurer retains control over distribution and customer relations while diversifying its offer. This strategy induces data collection and continuous improvement in the analysis of customer behavior.

This also allows the insurer to address its ecosystem through one or more universes of needs of these customers. For example, Groupama recently set up its “My New Life” platform. Its goal is to address a universe of targeted customer needs: retirement. Via this platform, Groupama offers numerous services in order to prepare, anticipate and calculate retirement, as well as saving and protecting those close to them.

However, despite the promise to keep control over customer relations and to diversify their offer through a platform, the “As a Platform” strategy remains little adopted on a more global aspect.

Traditional insurers do not benefit from significant traffic from their policyholders on their digital channels: customer area, mobile application, website, etc. This audience, which is significantly lower than that of the digital channels of banks, will automatically reduce the attractiveness of third parties for the insurers’ platforms.

# 2 – An “As a Service” API exposure strategy

In this API exposure strategy “as a Service”, the insurer can place itself either in the role of producer or supplier of products and services:

  • The role of producer materializes through a massive exposure of insurance products and services through an API platform that he has developed and whose purpose is consumption by third parties. This BtoBtoC model allows traditional players to extend their distribution through third-party channels.
  • In the role of the supplier, the insurer makes middle and back office infrastructure service modules available to third parties. Insurers will therefore seek to make the best possible use of audience hubs, and in particular existing service platforms.

The stake here, and regardless of the role taken, is acceptance of a remote distribution in which an insurer or an AssurTech would distribute its products, services or service modules through third-party environments to extend its distribution to other sectors and derive additional revenue.

The economic aspect of these models is central for incumbent insurers and the implementation of a monetization strategy is essential.

In an API consumption strategy, insurers would receive commissions from aggregated third parties on their platform (s). Conversely, in an API exposure strategy, they would diversify their revenue beyond their industry and save customer acquisition costs.

The insurer as a producer exhibiting its products and services in the form of APIs via platforms belonging to third parties

Many insurers and AssurTechs have chosen to exhibit their products and services on platforms belonging to third parties many sectors:

  • Chinese AssurTech Zhong An offers a plethora of APIs and is therefore present in many platforms outside the insurance sector.
  • Wakam (formerly La Parisienne Assurances) offers a range of services from its API platform. This allows it to experience significant growth and develop its presence in many sectors and internationally.
  • BlaBlaSur, the insurance service of the BlaBlaCar carpooling platform was not developed by BlaBlaCar, but comes from the AXA range. BlaBlaCar has integrated the AXA service, which plays the role of producer, and can thus offer its customers a comprehensive range of services while allowing AXA to extend its distribution network.

The insurer as a supplier of middle and back office service modules in a BtoB model

It means a provision of entire service modules to third parties. These modules will be at the service of third-party insurance products (eg risk calculation modules, automatic claims management systems, authentication systems, etc.).

For example, the Chinese insurer Ping An exposes its biometric recognition service (Smart Verification) to guarantee authentications. Thus, a company wishing to set up a biometric authentication service in its routes but not having the means to do so, will be able to consume the Ping An APIs and thus save development costs and ensure excellence. operational service in the service of its insurance product.

What impact does Open Insurance have on customer relations?

These strategies offer a bright horizon to insurance services both on the side of the insurer but also of the insured.

In general, bankers and insurers agree on an essential need in the management of their clients: the capital importance of capturing and identifying the moments and stages in the life of their clients and those close to them and offering them adapted products and services. .

For their part, policyholders are increasingly demanding. They are looking for innovative, personalized products and services that are as close as possible to their reality, all in an increasingly efficient environment.

Open Insurance can meet many of these needs. Thanks to these openness strategies, insurers and AssurTechs can collect data, analyze it and make use of it in order to increasingly identify the situation of their customers and respond to it with tailor-made offers. As for the insured, they can navigate within innovative and personalized service platforms that give them an improved user experience.

Open Insurance undoubtedly represents the insurance of tomorrow. New digital players are developing, ever more personalized services adapted to customers are emerging and inter-player communication is increased tenfold thanks to APIs.

To arrive at this new model, traditional players must now rethink their business model in depth.

According to VERTONE, the success of Open Insurance lies in the synergy between insurers, assistants, AssurTechs and other players in the digital economy. This creation of partner ecosystems will allow the launch of new comprehensive and personalized service offers that will meet the evolving needs of customers.

An article written by Pierre Kollen et Ali Romdhani



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