Innovating insurance through the power of API-led connectivity
But, unlike banking, the tr...
With $135.7bn in global investment, Fintech is clearly one of the most attractive sectors for disruptors and innovators.
But, unlike banking, the traditional Insurance industry proved itself to be more resistant towards disruption, which is not surprising, since one needs volume and scale for the probability models to kick in. In the end, it’s math and actuarial science that make it possible to earn on risks.
Mathematics, on par with industry regulations and all-pervading market coverage by industry “old-timers”, creates high entry barriers for new players. Ironically, the same factors also prevent traditional Insurers from showing significant YOY growth. This means that the companies need to optimise costs, find new market segments and offer personalised services that appeal to customers to stay profitable, and digital transformation is critical in delivering on these goals.
“Traditional business models are being challenged and not by innovation in insurtech per se, but by technology shifts in other industries”, says Mike Randall, CEO at Ricston (an IT consulting company working with fintech). “Let’s take automotive, which was traditionally hard to disrupt. Technology innovation and the increase in IoT led to the ability to gain far more data inputs from vehicles. Given an ability to connect with these data sources, one could better assess risks and therefore drive premiums to the most relevant demographic“, he explains. “That’s a significant opportunity for insurance companies, allowing them to offer competitive rates, but also causing the industry to rethink their technology stack. Some of our clients recognised the need for such digital transformation early on and turned to an API-led connectivity approach, harvesting the first results today ”, Mr Randall concludes.
For instance, multinational insurance provider Zurich Insurance is utilising the benefits of an API-economy by creating easy to use, purposeful APIs for their partners and customers to integrate their risk management systems and share data and information together.
And it is not only B2B integration that can benefit an insurance company. APIs can also be used internally to connect backend systems to streamline business management processes and raise efficiency across all subsidiaries worldwide.
"When you operate a diversified global business obtaining a 360 degree view of your customer base is very challenging", explains Kevin Jervis, CTO at Ricston; he continuous, "risk profiles and calculations associated with insurance products, and therefore, quotes and prices will vary depending on which geographic region of the business is handling an account, furthermore, subsidiaries may use different back-office systems". Jervis argues that "one of the solutions is to create a micro-services architecture to enable a common CRM to 'source' data from disparate systems and streamline federated quote-to-cash processes; for instance, the broad connectivity and data sourcing capabilities of MuleSoft's Anypoint Platform are being successfully utilised to enable process automation and end-to-end visibility in Salesforce today".
Public insurance companies, such as icare, are focusing on unlocking their legacy systems and radically redefining end-user experiences to meet mobile-centric market demand. Kevin Jervis explains that this is also achieved with an API-led connectivity approach, “where APIs are used to wrap the core system complexities and enable the orchestration of processes to expose the required data to the consumer”.
Meanwhile, shifting global economics and demographics, rising customer expectations and changing digital environment cause significant challenges and create additional pressure for the companies to become more adaptive.
“The need to adapt and adapt fast becomes crucial for traditional finance industry stakeholders, we’ve put our bet on API-led connectivity approach and are working towards achieving a composable enterprise vision ”, says Mr. Randall.
ServiceNow pumps millions into EU service compliance
ServiceNow, the digital workflow company, has announced a multimillion euro investment to help EU customers meet compliance requirements.
The legal, technical and organisational safeguards will help companies to comply with the the Schrems II judgment and European Data Protection Board (EDPB) Recommendations issued in June 2021.
ServiceNow’s investment means all EU-hosted data will be exclusively handled within the EU, and the cloud-hosted digital workflow provider claims its solution will come “without impact on current delivery and service”.
ServiceNow upgrade: free of charge
There will be no cost for current customers to opt in to the data compliance solution, even though ServiceNow is investing an unspecified multimillion euro sum and hiring more than 80 new staff across the bloc.
Mark Cockerill, vice president legal, EMEA and global head of privacy at ServiceNow, said: “With any regulation change, cloud services companies have a choice. They can adopt a ‘wait and see’ approach or get proactive and help customers and partners innovate. At ServiceNow we are on the front foot, continually investing in our customers, allowing them to operate with the highest level of choice and control over their EU data.
ServiceNow upgrade: ‘peace of mind’
“Our new EU-centric service delivery model will give our current customers and partners peace of mind. For customers and partners operating in highly regulated industries, or in the public sector, or those that have yet to make the switch to the cloud, this model gives them certainty and simplicity when selecting the cloud service that best suits their needs.”
Carla Arend, lead analyst, cloud in europe for IDC, said, “The Schrems II ruling has led European organizations to revisit their cloud-related data protection policies and processes when it comes to international data transfers through cloud services.
“Contractual, privacy, and security safeguards and the assurance that data will be kept and handled in the EU help European organizations to comply with European data protection laws while taking advantage of global cloud platforms. Vendors, such as ServiceNow, that invest to support their customers in response to this ruling are providing essential choice to their customers.”