RL - Insurance

Chapter: Going Forward 13 GOING FORWARD The speed, cost, and customer intimacy advantages provided by APIs will result in continued investment in the technology. Over the next 12 to 18 months, Celent expects the following developments in API use in insurance: • The industry will continue to move toward an era of cocreation and competition for the seamless provision of goods and services. It will be increasingly difficult for a single insurer to deliver all the products and services necessary at an acceptable level of sophistication and speed for their consumers. Thus, the ability of APIs to allow the modularization and decoupling of products and services will increase in value. Many services, some peripheral and some not, will be unbundled and possibly assumed by entities such as IoT sensor, specialist data, and drone inspection providers. • Insurers will closely observe the developments in open banking and take note of both industry and regulatory actions. These results will influence the rate and intensity of activity. It is likely that they will also motivate more insurers to build or license an API platform so that they can integrate with partners via open APIs. • Investment in API management platforms to control risks will increase as use increases in scope and complexity. Given the breadth of the functionality required, it is unlikely that insurers will build these utilities. Specialist software/service firms that deliver competitive software will grow. • Insurtech startups and incumbent technology providers have an opportunity in the small insurer market if they can determine how to economically serve firms with limited scale. • Efforts to develop API insurance standards will continue and accelerate. Within five years, API platforms will be the only choice for insurers to stay competitive and offer a digital experience to their customers. Complementary products will almost entirely be delivered via APIs. Enhancing the user experience, establishing integrations across multiples lines of business, and diversifying distribution channels will necessitate API capability. Successful insurers will manage the risks involved in the new technology and the new ecosystem. Toward that end, Celent offers four concrete recommendations: 1. Formulate an open API vision. 2. Redesign traditional products and services to take advantage of the new capabilities. 3. Establish relationships with external partners — developers, insurtech startups, and traditional technology providers. 4. Redesign IT as an enabler, including implementation of new control mechanisms needed to manage APIs. Was this report useful to you? Please send any comments, questions, or suggestions for upcoming research topics to info@celent.com.

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