APIs in Insurance – Good or Bad?

APIs in Insurance – Good or Bad?

Please tell us more about your FRIDA initiative with Insurlab – how would you explain this to a 10-year-old? How does the status quo of interface standards in Germany looks like at the beginning of 2020? And what are the next steps?

Every child knows: Lego bricks and Duplo bricks cannot be connected seamlessly. It’s quite the same when it comes to data exchange in the insurance industry.

It’s 2020, but there are still no uniform, digital interfaces that enable a fast and paperless transfer of information between insurance companies, brokers and especially insurance customers. Instead, there are interfering connection problems making data transmission slow, costly and inefficient.

To enable smooth processes we have launched the nonprofit Free Insurance Data Initiative (FRIDA) together with Alte Leipziger, Ernst & Young and InsurLab. Our aim is to establish a uniform interface standard for efficient and secure data transfer in the insurance sector. At the same time process and operating, costs should be reduced. We want to act instead of reacting and set a standard before the regulators do it.

In the next step, we will figure out how to open insurances’ APIs should be organized so that insurance companies, agents resp. brokers, as well as insurance customers, benefit equally.

In times of Amazon, Facebook and Google customers don’t understand why to have to wait a long time for certain information from the specific insurance company. Nowadays, I see my order on Amazon, know how far away it is from my home and can make changes purely digital – instantly. But when having a claim, preparing my tax declaration, sharing my new address with an insurance – actually also “only data” – I should wait weeks?

The insurance industry is in a good situation to make a statement and bring new value-added services for the customers.

Why the initiative was limited to Germany? Does it make sense to provide EU-wide solutions? What would be the hiccups to make this possible?

Germany is one of the largest insurance markets in the world. When creating a standard of course we want to reach as many participants as possible. However, in times of state-of-the-art technology, it gets a lot easier to expand into further markets. And of course, insurance partners within FRIDA are multinational. As soon as it is successful it can be rolled out in other markets.

The GDV data service “VU-Vermittler” and “BiPRO” as two of the few existing standard formats for data transfer are the first steps in the right direction. We want to build on this and develop an open insurance API that is freely available to use, distribute and extend.

The most important question is how insurance customers would benefit from this?

The API should fit the needs of the insurance companies that want to enhance their own services and digitalize their processes. But it also should enable customers to handle insurance matters quickly and also strengthens their data sovereignty – comparable to PSD2 in banking. Therefore we are considering what lessons can be learned for the insurance industry from the experiences with open banking.

As mentioned above: there are many beneficial use cases for the customers, such as the Pension-Dashboard, also pushed by the government, where a customer should upload all of his retirement plans from all different insurers. There is not yet a standard that focuses on the customer.

What is your forecast for interface standards for the next 5 years? How does the industry look like? And what impact does this have in the industry?

In five years big data and artificial intelligence will have transformed the insurance industry significantly. 2025 it will be common practice for insurance companies to use the opportunities coming from bank account extraction. There will be plenty of innovative solutions in the insurance market, all driven by PSD2 and Open Banking. And a large part of insurance customers will start to use digital financial homes within the next five years.

Sebastian Langrehr, Head of Bancassurance on Friendsurance

Many startups come and go. One of the very first insurtech companies which have come to stay in the Berlin-based scaleup Friendsurance which develops innovative digital insurance solutions with the aim of making insurance more customer-friendly.

In 2010, Friendsurance launched the world’s first peer-to-peer insurance model which has more than 30 imitators worldwide by now. Since 2017, Friendsurance operates digital bancassurance as an additional business segment. On the tech company offers a digital, scalable and modular bancassurance platform for national and international banks and insurers who want to better retain and monetize their customers through meaningful features that allow to digitally manage and optimize insurances. Friendsurance provides both Whitelabel solutions and tailor-made solutions that can seamlessly be integrated into the systems of partners such as Deutsche Bank and R+V Versicherung.

In spring 2020 Friendsurance will celebrate its 10th birthday with 100 employees, 150,000 own customers and around 200 cooperations reaching millions of customers in Germany and beyond…

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