The gradual adoption of APIs means that insurers need to adapt their strategy and their distribution model. The question they therefore need to ask themselves is, how can we maintain a prominent place in a sector where information systems can connect with each other more easily and quickly? Or alternatively, how can market players stay one step ahead and leverage this development, rather than having it forced upon them at a later stage?
“Traditional” distribution
Although Open Insurance isn’t revolutionising “traditional” distribution (broker networks, partnerships, etc.), APIsation nevertheless allows insurers to distribute and deliver their insurance products and services to other players more easily and more rapidly. Currently, a broker that wants to distribute a product negotiates the tariffs, the provision lead time, the conditions of sale, the types of beneficiaries, etc. When an insurer makes its “APIsed” products available, the broker just has to integrate the product into its information system by following the API user guide provided by the insurer. This means that the partners (brokers, external distributors, etc.) don’t need to ensure their IS is aligned with the insurer’s IS first, or go through various discussion and negotiation phases beforehand. The product is made directly available to them and this only requires a simple “technical” connection.
The personalisation of health insurance offerings
Service offerings
Although insurers need to rethink the distribution model for their products with the arrival of APIs, they can also take advantage of this to broaden their service offerings. In a society where consumption patterns are tending to become more individual, tomorrow’s insurer needs to be able to offer personalised and metered services.
The survey led by Infopro Digital Etudes for Cegedim Insurance Solutions and L'Argus de l'Assurance about Open Insurance, found that 60% of respondents are prepared to use new services offered by their mutual insurer, in both the health and non-health segments. Consumers also see mutual insurers as legitimate in offering this type of service. In terms of prevention services, health insurers are the second best-placed in terms of legitimacy, second only to health professionals. Lastly, in care services, health professionals and hospitals are seen as the most legitimate. Health insurers are in third place in this segment, where there is a real new growth driver that insurers can activate.
The growing concern around the subjects of occupational health and work-life balance is prompting players in the insurance industry to incorporate these issues into their service offerings. For example, in group insurance, these same players could offer prevention packages comprised of the following services:
- Medical analysis services- Fitness programs aimed at employees and the creation of intra-company communities
- Prevention of psychosocial risks
- Sports classes provided by professionals
- Nutrition and health programs
- Etc.
Although these services would not be automatically included in group policies, as is currently the case, they could be provided independently in packaged form. This would give the beneficiaries the opportunity to choose and pay for them on a metered basis. Through partnerships, an insurer would market these services via API on its platform aimed at companies. The idea is for the insurer to offer health service aggregation platforms.
On an individual basis, an insurer could aggregate partner services around health issues or “life moments”.
Health partners’ offerings could also be directly connected via API and offered on the insurer’s platform (customer area, digital app).
The insurers’ key challenge in expanding into services is to find the right business model, as the cost of services unavoidably impacts prices for end customers – and price is still the main criterion when it comes to choosing a policy. In individual insurance, the business model that insurers need to identify therefore remains a hurdle. How much a service costs will involve how the end customer perceives its added value. Group insurance is where it seems the driver can be activated most easily. Companies would be more inclined to finance these services to offer them to their employees and allow them to enjoy a comprehensive health offering. Several pricing models could therefore be envisaged: metered pricing or pricing in the form of subscriptions that can be adjusted to the customer’s needs, for example.
Rather than inundating customers with services when they don’t know what to do with them, the goal here is to effectively target their needs and group together all of these offerings in the same place – like a marketplace – to make their lives easier.
Product offerings
Although APIs foster the growth of metered services, the model can also be expanded to the distribution of personalised insurance products. These APIs can be used to further expand the distribution of white-label products, notably for insurtechs, which could distribute insurers’ products and services more easily. The trend is to adapt the insurance world to current modes of consumption, to be able to provide health coverage for everyday products and services. API technology enables simple, fast and ready-to-use integration of insurance products. This means insurers have the opportunity to distribute insurance products through new, non-specialised partners that are more personalised and meet everyday needs. This is one of the major challenges for insurance distribution in the future.
“100% digital” distribution
Some players have grasped the importance of setting up an IT architecture based on APIs and are now forerunners. This is the case in France, for example, with Wakam (former La Parisienne Assurances14), which has created a full API architecture. Thanks to its ready-to-use products in API form, it has posted an online catalogue of insurance products available to anyone who wants to integrate ready-to-use or modular coverage into their offering. This innovative approach, which was crystallised in 2017 with the arrival of its first APIsed products, was not doubt decisive for Tesla, which chose it to insure its smart vehicles. The Paris-based insurer now collaborates with the insurtech By Miles to insure Tesla smart cars.
Because few players have yet made the switch to APIsation, there is still time for health insurers to capture the potential growth of this new approach.
If you are interested in this topic, the Cegedim Insurance Solutions team is at your disposal to answer to all your questions.
