Insurers are increasingly turning to open banking to personalize coverage, increase access and streamline applications.
In the latest example of the trend, U.K. open banking provider Yapily recently announced that it has teamed up with InsurTech company Certua to integrate open data sharing into its embedded insurance platform.
Read more: Insurance Industry Takes Lead in Embedded Finance Adoption
The partnership is an example of the opportunities open banking presents to the insurance sector, which relies on financial data on their customers —such as income and expenses — to inform its decision-making and price-setting models.
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In the traditional model, whether they’re in the life, home, auto or any other type of insurance market, providers typically require people to submit bank statements. Based on this snapshot of their financial situation, customers are then sold cookie-cutter policies which often fail to take into account changes to income and the richer datasets made available by combining account data, leaving many customers overpaying or even locked out of the insurance market.
But in the age of open banking, far more comprehensive, up-to-date information can be gathered thanks to data aggregators like Yapily, which create unified customer profiles based on account data from multiple sources.
TrueLayer is another firm seeking to strengthen its position in the space. In 2018, the London-based unicorn became one of the first European open banking platforms to enter the industry via a partnership with the online life insurance broker Anorak.
Visa-owned Tink, on the other hand, has cited the insurance sector as central to the emerging field of open finance.
Beyond its promise of more streamlined underwriting and tailored pricing, Tink argued in a blog post that the data made available by bank application programming interfaces (APIs) can also be used to deliver a more personalized customer experience across the board.
Data Sharing for Open Insurance
Consumer demand for integrated, personalized services means that there are other opportunities for data-sharing beyond those made available by open banking regulation such as the EU’s second payment services directive (PSD2).
Like banks, insurance companies are sitting on a treasure trove of customer data and as consumers increasingly embrace the sharing of their personal information, there is an opportunity to provide them with improved products and services and fuel a wave of innovation in the industry.
Looking to jumpstart the movement, think tank Open Insurance is looking to emulate the success of open banking by defining API standards and data-sharing frameworks for the insurance industry.
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