Open insurance & the API economy

What a great afternoon we had yesterday! Full of relevant actionable insights.

And this is the most important part… actionable insights are what we were able to get yesterday!

And thank you all for the kind messages I already received through LinkedIn.

Yesterday, I had the honour to be a pundit for Episode 6 of the Insurance Innovators Digital Summit alongside Lindley Gooden, chair, and cheerleader-in-chief for the virtual event.

I am sure that you all know Lindley, right?… from his time on the BBC & Sky.

The session was about “Open Insurance and API Economy”.

Many insurance practitioners recognized that this is an important topic for us all in insurance because of the fast tech players entering the sector as well as BigTech.

Lindley and I had a wonderful time listening, harvesting, and synthesizing the insights we got from the day. I hope you enjoy this short article. This is not a replacement to access and review the content that the Insurance Innovators Digital Summit team at MarketforceLive has put together to ensure that while we plan for 2021, we also appreciate the importance of the topic, as we redefine and reinvent what insurance could look like for our customers in the years to come.

The backdrop

Open Insurance and API Economy are both often linked to tech and the developer world. However, as yesterday's afternoon's sessions highlighted the topic is much more than that. It is very much linked to the business... to its issues, strategy, business model transformation, the democratization of growth, and the linkages to the connective tissue which enables the construction or assembly of tomorrow’s needed capabilities and differentiated ecosystems.

As highlighted in many McKinsey articles, well-deployed API-driven ecosystems can cut costs, improve efficiency, and help the bottom line. And one of the quotes I like the most from those studies is:

As much as $1 trillion in total economic profit globally could be up for grabs through the redistribution of revenues across sectors within ecosystems.

This statement highlights the shift or displacement in revenues, which is very much aligned with Michael Jacobides' - Sir Donald Gordon Professor of Entrepreneurship and Innovation and Professor of Strategy and Entrepreneurship at London Business School - explanation of what ecosystem thinking is. Michael stated that this is about 1) following the money 2) reviewing what is happening in other sectors already and 3) bundling, unbundling, and re-bundling business model capabilities to identify and shape the enablers of the future.

API-driven ecosystems are rooted in execution strategies

APIs that are used to connect technologies to ecosystems become a significant competitive battleground to drive new competencies and capabilities. They are rooted in a strategy that is converted into actionable and executable plans.

Any insurers wanting to do this right will need to:

1. Rethink their values
2. Manage their “ego-centric” lens and
3. Avoid assuming that they can replicate someone else’s business model and operational tactics, which Michael called the "LeBron James Syndrome" (or "let's just copy others tactics and expect for the best" syndrome!)

API is certainly not based on random thinking. The panelists speaking during the afternoon sessions were highly informative on what a long-term API first strategy should look like. In short, think about agenda setting, end-to-end goals, architectural alignment and compliance, no time for complacency, and a requirement for accelerating time-to-value while providing the organization with some form of re-use.

While still quite visionary in some parts, standards were also recognised and discussed as well as the need to combine past, present and evolving standards to build highly effective architectures.

Understanding that aligning the internal operational world with external customer demands is not a nice-to-have option any longer. It's just is a baseline expectation.

Like amazon marketplace, bring the entrepreneur to the platform.

Jimmy Williams

Business models, customer journeys, embedded partnerships, and differentiated revenue models became the most highlighted components across talks.

It is about the end-to-end value that can be created with partners through well-defined profit sharing models.

Elizabeth Falck

Please do go and listen to those amazing speakers, as I will not do justice to all. They all shared very unique insights to build your own “Open Insurance and API Economy” strategies.

Great companies are already on the path to building such API-driven ecosystems. The shortlist of players mentioned/ discussed include:

Incumbent: Allianz, AXA, La Parisienne, PingAn, Prudential among others

InsurTechs: Anorak, BoughtByMany, Hippo, Lemonade, Plum, Root, Zego, ZhongAn

BigTechs: Alphabet, Amazon, Apple, Microsoft

My conclusions from the day and personal checklist

1. Define the right business model: Understand what your core strengths are before defining your next options. Your business model like many others is shifting and as shared, there may be many of these business models that you must consider deploying within a fully fledge ecosystem-driven world.
2. Be customer-obsessed: Remember that your customer is changing every day, and your old offers may not fit his/her new demands. Customer obsession (besides words) is something real. It is embedded in knowledge, competence, care, authenticity, trust, credibility, and specialism… to share but the few.
3. Consider those new products and services you want to put to market (through a well-crafted value proposition): At least at this stage, let’s build an idea as to where we are going.
4. Validate your customer journey: Let’s really understand what the customer wants and let's make sense of this from a friction-free engagement viewpoint. This will mean that your offer or service may be part of a larger ecosystem and embedded within it… and this should be OK. Because the offer will be one of the multiple ecosystems you will be building in the future.
5. Define change through operating model design: Yep, if we are not building a new business we are going to shift internal capabilities or adapt them to meet new customer needs. What will this look like? A key part of our conversation was that Open Insurance, the API Economy, or Ecosystem building. These are actually strategic initiatives that must be discussed at the board table. These will also shape the business or IT architectures of the future.
6. Shape your API-led ecosystem: This will require some level of understanding of how to assemble things to build unique competencies for the future. This will also require a focus on partnership strategies, an understanding of revenue/profit sharing strategies… at least, as a minimum!

Find your place in the ecosystem. API strategies are not built overnight.

Soren Degn Jahns

And finally – Lindley I look forward to joining you on our next commentator opportunity. I think we were an awesome team. Thank you again to the whole Marketforce Insurance Innovators team as well as the respected list of expert speakers and panelists that providing a rich source of inspiration to shape this summary of the afternoon event.

Just add a sneak pick at the digital assets. They are now published and they are really informative. Do try and access them here.

Tomasz Kurczyk, Chief Transformation and Digital Officer, AXA Singapore

Michael G. Jacobides, Sir Donald Gordon Professor of Entrepreneurship and Innovation; Professor of Strategy and Entrepreneurship, London Business School

Sarah Greasley, Chief Technology Officer, Direct Line Group

Steven Woodford, Chief Technology Officer, BGL

Elisabeth Falck, Nordic API Manager, If P&C

Michael DeGusta, Chief Executive Officer, ClarionDoor

Fouad Husseini, Founder, The Open Insurance Initiative

Tim Crossley, Business Development Director, Sapiens

Claudia Bienentreu, Head of Open Innovation, AXA Switzerland

Jimmy Williams, Chief Executive Officer, Urban Jungle

Charles Ruelle, Chief Innovation Officer, Euler Hermes

Soeren Degn Jahns, Chief Technology Officer, IBA