Exclusive: ‘Anopeninvitation’ – Stephen Walsh, Sensedia in “The Insurtech Magazine”
Stephen Walsh, EMEA Director of Sales at API specialist Sensedia, believes ‘open insurance’, like ‘open banking’, has the potential to increase revenue-generating opportunities and improve customer journeys
A car crashes through a wall and the vehicle’s airbags are deployed. While the driver sits dazed, the airbags have triggered a call to the emergency services via the car’s embedded SIM, and a GPS location is sent.
Such ‘SOS assistance’ features already exist on higher-end vehicles. But technology could go further – much further. The car’s vehicle management system could send damage assessment data and a GPS location to the manufacturer so that its recovery service could be sent with the parts to make a repair – or have them ready and waiting at a garage. And a snapshot of weather conditions and dashcam footage could be automatically sent to the driver’s insurer to assist a subsequent claim. Once the car is repaired, the insurer’s repair garage could send a report to the manufacturer of work done so it can assess both crash performance and repair costs.
This scenario is just one example of how a connected future could shape the insurance industry – speeding up processes, improving claim accuracy and, ultimately, helping to limit cost for everyone involved.
Automation also means the shaken driver has one less thing to worry about, says Stephen Walsh, EMEA director of sales at API specialist Sensedia – an element of customer service that reflects well on the insurer.
“If my car has been given permission to link with my insurance company to provide the initial details of the accident, that reduces my emotional engagement and speeds up the process,” he says.
In fact, he sees the potential for insurance companies to sit at the centre of a web of information, collecting and coordinating data, enabling them to make faster decisions – and thereby generating more revenue.
Sensedia sees the development of insurer ecosystems linked by APIs as central to this new ‘open insurance’ world that offers major benefits to both customers and businesses. But, unlike the banking sector, there is no legislative driver for that – no PSD2 (revised Payment Services Directive) to lay the framework and propel change. So, some insurers have been slow to identify the potential structural shift, and continue to follow decades-old business models.
Sensedia works with businesses to help them align strategy with new technology and develop a network linked by APIs. Then, once those APIs are launched, the São Paulo-based integration specialist provides a set of solutions to manage them for its clients. Standing still isn’t an option in the face of disruptive startups and the world’s tech giants moving in on insurance markets, says Walsh. And customers are changing, too – churn is seen as a virtue and people will potentially switch providers for the sake of saving a few pounds or pesos.
“The consumer is no longer the person like my father-in-law who’s happy to get something through the post to say ‘your insurance has renewed’,” he says.
“People look to save money when they renew, and they want to know exactly what they’re getting for their money. From the insurance company’s perspective, firms need to ask how to attract this new breed of customer who is more flexible and less loyal. And they must also understand that churn is a risk if they fail to interact with that customer and offer new products and services.”
As with open banking, APIs allow insurers to broaden their offer by selling white-label products from partner providers. But, perhaps more importantly, APIs also increase the potential to leverage data, whether it is held by the insurer itself or comes from an external source: weather reports, car telematics boxes, data from wearable tech. And the impact of that granular information on underwriting could be huge.
Walsh says: “If you operate a partner ecosystem model, APIs can release the power behind those partnerships, enabling bespoke products and services to be offered to different customer profiles. What used to be really expensive to implement is now low cost and easily accessible – as long, of course, as you’ve embraced that new way of working.
“The key focus for insurers at the outset is to identify what integration is required, then establish the business partnerships that facilitate growth. This comes before the technology, since in the current environment there has to be a real return on spend, whether it’s to improve efficiency, reduce customer churn or raise profitability per customer. Then they must work out what access each partner needs and the technology plan is developed.”
Sensedia’s customers include institutional players with legacy IT systems who tend to follow an established ‘way of doing things’. One was Brazilian insurer SulAmérica Seguros, which focusses on health, life and pension cover.
Sensedia’s input changed SulAmérica’s business from ‘one where the insurance man comes round to the house with a book, to thinking about things which no one else is even trying’, according to SulAmérica’s chief technology officer Cristiano Barbieri. He summed up the agility that APIs brought to the business when he revealed that directors now recognised the IT department was a bigger driver of change than the board.
He says: “We had business areas that two years ago massacred us, everything was slow and expensive. Nowadays, in board meetings, directors recognise that IT can deliver things in projects far faster than anything else. Those who lead the technology have a responsibility to transform the business.”
Examining APIs from the consumer’s point of view, Walsh says increased automation is attractive when onboarding, claiming and renewing.
“Starting with the purchase, customers need to know a product meets their need; it needs to have that value proposition, and they’ll want to edit and add bits and bobs to a policy until they’re happy,” he says. “When it comes to making a claim, when someone’s suffered an accident, a loss, some damage, their emotions will be running high. They don’t want to be judged – they maybe don’t even want to speak to someone on the phone. They just want to give their details quickly and easily. And when the claim is being processed, the customer wants to know how far it’s got; they don’t want to wait for a call to be answered or to hear someone read text off a screen when they can read that text themselves.
“An insurer with efficient digital channels will really reap the rewards,” says Walsh. “But that’s not to say there aren’t points in that journey where interactive voice systems, and indeed in-person systems, are absolutely going to add richness to the customer experience. But it’s about understanding where they fit, and how you can pick up different
bits of technology to make the customer’s journey better and easier. Handled well, the customer is more likely to renew due to their positive experience. From an insurer’s perspective, managing that customer journey needs to be as inexpensive as possible, while providing the level of service the customer requires.”
Another aspect of increased data use that benefits both customer and insurer is the ability to increasingly customise a quote for digitally-mature customers who want products on demand.
When estimation is reduced, the insurer is less likely to price its cover incorrectly, which cuts the risk of suffering a loss. And it opens up the potential for real-time risk protection products that can be bought on a pay-as-you-go basis.
“With modern, 5G-connected cars, we have the potential to insure on a per-journey rather than an annual basis,” says Walsh. “A 500-mile journey on motorways has a different risk to popping to the shops. By using data that’s harnessed via APIs, insurers can use information from a range of sources to give a quote. Tiny facets of information, such as who is in the car, the route and weather conditions, can build an accurate picture to calculate risk.”
Of course, data use raises privacy questions, but this can be ‘designed in’ when technology systems are built, he says: “An API is a secure information traffic tool, and it can also enable additional layers of security on top to address data leakage.
“With increased data protection regulation, it’s becoming increasingly complicated to manage and, in an insurance context, there is masses of personally identifiable data. But if you’re building your ecosystem around data privacy, using APIs to unify databases automatically, building in layers of security, obfuscation and encryption, you can simplify your governance while, at the same time, identify any vulnerabilities inherent in those systems.”