The insurance market is going through a new phase of Digital Transformation, far beyond the mere digitization of processes and mobile applications. Large technology drivers (APIs, Cloud, IoT, AI, Blockchain) are converging and opening up opportunities for competitors who have technological expertise and innovative business models, such as platforming, which broadens the range of offerings and also raises customer expectations.
Many insurers are finding it difficult to design their Digital Insurance strategies and position themselves in the face of the avalanche of disruptive technologies that need to be assimilated and integrated into complex legacy systems that are at the core of critical business processes.
The assimilation of these technologies offers numerous possibilities for improvement, as in the case of AI tools and Analytics, which allow the analysis of large volumes of data in real time, making evaluations from behaviors and triggering proactive actions.
Another example is the use of AI from bots for conversational interfaces with clients and RPA for routine activities. Thereby, one can automate most of the repetitive manual tasks, increasing efficiency, reducing the chance of errors and fraud, providing more agility and better experience for the customer (check it out! Lemonade reports Claim Paid in 3 seconds with no paperwork).
The combination of AI and the Internet of Things (IoT) enables devices (sensors, actuators, wearables …) and drones to be monitored and remotely activated, achieving a more accurate risk assessment and performing preventive actions, as well as offering products/customized services in real-time.
In turn, Blockchain enables secure and traceable transactions in a decentralized and straightforward manner. These technologies can be integrated via APIs and boost different types of services such as P2P insurance, microinsurance, real-time insurance, sharing economy insurance, usage-based insurance (UBI), pay-as-you-drive etc.
These transformations lead insurers to seek new strategies to develop technological capabilities, access new channels and expand offerings, such as platforming, in which the exchange, combination or creation of services between business partners is promoted, so that participants in the ecosystem can capture value.
To be operational, these strategies require an efficient and responsive IT environment that enables agile and secure integrations through APIs, connecting legacy systems, databases, devices, applications, cloud services and partners.
APIs Enable Digital Strategies
APIs are a standardized and agnostic means to make integrations between people, things, applications and ecosystems, with agility and scalability plus the application of mechanisms for security and control.
This ability of the APIs in offering and combining resources of different elements places them as key enablers for digital transformation, favoring innovation and new business creation.
In addition to integrations between systems, devices and partners, the APIs:
- Distribute data/services through New Channels, through different interfaces and devices (IoT), or offer an omnichannel experience to users;
- Compose data/services on New Products, extend existing offerings or market APIs with different forms of monetization, and reduce time-to-market;
- Develop a new event-driven and microservice-based new IT Architecture and mesh apps, to achieve greater agility and scalability, reuse, uncoupling, small deploys, flexibility, responsiveness;
- Explore New Business Models combining resources and strategies, such as Platforming;
- Consume new technologies as services (AI, for example);
- Build the foundation for Open Insurance, to enable third-party developers to build their own applications and services from open APIs;
- Create Open Innovation initiatives such as hackathons and co-creation projects with partners or startups;
Tipos de APIs: Internal, Open, B2B, Product
Platforms Strategies for Insurtechs and Insurers
The competition is no longer just between companies, with only their own products and assets (Pipelines), but between ecosystems, with partners that are able to combine services, orchestrate resources and perform coordinated actions (Platforms) – and in this model, systems integration through APIs becomes critical.
Through a platforming strategy, it is possible to:
- Achieve new sales channels;
- Provide interactions with new customers;
- Create and implement new products/services;
- Expand capabilities for existing products and services;
- Make a more effective use of data by applying monetization templates;
Platforming Principles or Platform Thinking
Platforming implies 3 central changes in the focus of strategies:
- From owning resources to orchestrating resources.
- From internal optimization to external interaction.
- From customer value to ecosystem value as a whole.
For Gartner, the platforming strategies can consist of 4 types (non-exclusive) and with different degrees of openness (with closed, restricted or open APIs):
- Collaboration Platforms – enable integrated and collaborative operation with ecosystem partners in new ways.
- Orchestration Platforms allow orchestration of shared resources and processes between ecosystem partners.
- Matching Platforms – facilitate the meeting of claimants and bidders.
- Creation Platforms – enable partners to build their own apps, products/services, capabilities and business models on top of the platform.
Some initiatives of platforming in insurers and insurtechs
Munich Re – The APIs (Digital Partners) platform allows its partners to work their clients’ full time, by selecting the services they want from Munich Re.
AXA – Through its APIS, it provides real-time insurance for partners in an integrated way with their clients’ schedule and their digital channels (websites, apps, etc.).
Lemonade – Its public APIs enable companies in various industries (real estate, finance, car dealerships, etc.) to offer insurance in a simple manner, on their websites.
Instanda – Self-service platform for creating and distributing insurance on online channels (directly or in broker portals)
Kasko – Provides an end-to-end insurance platform to enable insurers to create, launch, run and optimize digital products.
PolicyGenius – Independent Marketplace for Insurance Products.
Qover – Enables its partners to sell insurance for selected brands through open APIs.
Trov – Through its platform, it integrates its operation with insurers according to the geographic region, to offer coverage for protected items in your app.
Slice – Platform that connects with partners to offer on-demand insurance.
However, to support a platforming strategy (whether building or participating in an ecosystem), insurers and insurtechs need to seek to develop an agile, service-based IT landscape that exposes APIs to integrate legacy systems, new technologies and ecosystem partners.
The increasing complexity of the IT infrastructure and the importance of APIs requires that they are managed by an API Management platform that provides modern mechanisms for governance, security, support for API design and engagement of developers.
In Brazil, there are interesting cases of platforming strategies in the financial sector, which were developed together with the API Platform and Sensedia consultancy:
SulAmérica – a collaborative platform between partners to expand offers, stimulate innovation and improve customer experience.
Portocred – builds a credit marketplace, matching bidders and claimants and promoting integrations with partners via APIs.
Cielo LIO – payment platform and business management in which partnering developers can create their own applications integrated in the platform.
Tribanco – platform for collaborating with its clients and fintechs.
To implement these platforming strategies, whether building or participating in a platform-based business, large insurers have favorable resources, such as customer base, access to capital, brand, regulatory expertise. However, they have some difficulties, such as the complexity of their legacy systems, longer innovation cycles, tighter regulation.
In turn, insurtechs have a more agile innovation cycle, they can offer differentiated solutions and master specific technologies. However, they miss a broad customer base, strong and reliable brands, access to capital and scale economies, as well as the expertise to handle more complex regulations.
By collaborating with several insurtechs, insurers can have a number of capabilities and services to add to their offerings, expanding revenue streams, engaging customers, and acting on shorter trial and learning cycles Insurtechs can find a wide customer base in collaboration with banks, as well as the support of a consolidated brand, access to capital, support with regulations and scale economies.
This collaboration between insurers and insurtechs enables the delivery of a superior portfolio of services and channels for a consistent customer base with data usage and a more effective monetization, as well as stimulating the creation of new products and business models in a more open innovation environment.
To achieve this effective collaboration, it is not enough to just establish a shared business strategy, but to integrate processes and systems that provide agility, security and scalability – and the appropriate way to do this is by means of APIs.
How can Sensedia help?
Sensedia’s API Platform offers several tools for managing the operation and complexity of the APIs: API Gateway, Security, Dev Portal, Analytics, Lifecycle. These modules facilitate the design, exposure, consumption, management and monetization of APIs for creating Apps, communicating internal systems, developing microservice architecture, ecosystem integration, IoT projects, opening innovation initiatives and hackathons.
Sensedia’s API Management solution is one of the leaders and has a dedicated consulting and guidance team to assist in the design of digital business strategies, IT architecture, Microservices and APIs design.