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Creating an open API standard in the Insurance World

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Fouad Husseini is the founder of the Open Insurance Initiative (OPIN), that aims to be the largest open API project in the insurance industry. He took part in API DAYS Paris to connect with API architecture developers and experts to create an open API standard. OPIN’s objective is to allow the flow of data between insurers, customers and third party, as well as make data portability possible. What is ultimately at stake is to drive innovation and interoperability with InsurTech start-ups and established insurance companies.

Fouad Husseini , APIdays Paris 2018

What gave you the idea to start the Open Insurance Initiative?

I have been working in the insurance industry for more than 20 years, first in the UK and then in the middle east, as a case underwriter and operation manager. I am currently based in Saudi Arabia and employed as Deputy General manager of one of the top local insurance companies. Three years ago, I started to see the problems that my contacts at InsurTech start-ups had to connect to insurance companies, in Dubai and Saudi Arabia but also globally. Insurance companies have many different and proprietary systems that require bespoke integration with each one. So, what if a group of insurance companies could implement standards for open APIs that would save time and efforts to start-ups to implement innovative ideas.

At which stage of development is the Open Insurance Initiative?

I spent 6 months researching the idea and published a white paper in the summer of 2018 to set up the basis for a discussion in the international insurance market. For OPIN to happen we first need API experts to get onboard and to expand the number of people aware of this initiative, because I want this initiative to be community driven as an Open Source development supported by the open source community. We also need Regulators to be onboard because consumers private data need to be shared for OPIN to happen. So, I am currently focusing on meeting with the developer community and the regulators in Europe and in North-America.

Security will be one of the key aspects of OPIN. But even if existing standards and frameworks are listed in the white paper that define the initiative, I think it is too early to fix the actual security specifications of OPIN. I want to have this conversation about security with the experts and the community of developers to make sure that OPIN benefits from the latest available frameworks. We will also need funding and sponsorship from technology companies to appoint full time developers to the project and work with the community.

How do you currently see the acceptance level of the insurance industry?

I have regular exchanges with insurance and reinsurance companies because OPIN is still a new initiative. We have the example of what already happened in the banking industry with the EU’s “Payment Services Directive” (PSD) and UK’s Open banking that drives innovation in the market through access to data and services in a regulated and secure way. PSD went into force in 2007, PSD2 in 2015, so the banking industry already has more than 10 years of hindsight about Open Banking. The insurance industry is different, with high barriers of entry that make it difficult for new start-ups to enter this market, so we need time to have this conversation with all the concerned parties.

Consequently, the insurance industry currently doesn’t benefit from the innovation force of start-ups. In fact, insurance companies amass way more data than banks and a broader variety of data (for example, insurance policies information, clients’ assets, medical reports, wealth and income and claims history) but most of the time this data is not utilised by the insurers and remains locked up.

I believe the insurance industry will start to give support to the OPIN initiative when it sees how new technologies could benefit the insurance market at large. These benefits will include enhanced services and new products powered by artificial intelligence, chatbots, robo-advisors, virtual reality, augmented reality and also enabling integration with tech giants the likes of Amazon, Google and Facebook, some of whom have indicated their interest in implementing price aggregation services.

And what about the acceptance level of the public towards Open Insurance?

If we look at the customer acceptance of Open Banking this gives us some hindsight about the possible acceptance level of the insurance customers, we still need data or studies focusing on the insurance customers. In the UK banking market, latest research has indicated that 91% of customers have not heard of Open Banking yet, and 75% are unlikely use it because they don’t trust that information about them won’t be lost of misused (Source: Research commissioned by Challenger Bank CYBG and conducted by YouGov). We first need to highlight the importance of data literacy for Open Insurance to be taken seriously and to introduce customers to the idea of sharing data with third parties. The Open Banking initiative has missed that critical step.

What we need to reassure the consumers about is that Open Insurance will make financial services more accessible, cheaper, easier to transact and provide wider choices. For instance, a life insurance policy takes between one to three weeks to be issued, which is a burden for both the consumer and the insurance company. To get quotations from different insurers, you need to fill a form with the same type of information for each insurance company. Open APIs would definitely reduce this type of inefficiencies removing pain points for consumers and offering services like quote comparison, suggestions of alternatives and financial planning from the same insurer or from other insurers. If we give consumers the right information about how they can benefit from sharing their data, the adoption rate of open insurance will rise significantly. Consumers will also enjoy being able to cancel authorisation given to third parties to access their data and ways to control who has access to their data and for how long.

Written by Séverine Godet

To know more about the Open Insurance Initiative, you can read the whitepaper published by Fouad Husseini at openinsurance.io

This article first appeared on Medium

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