Open Insurance, Figital, SISS

Understand what open insurance is, the concept of figital, SISS and how user experience is crucial for better implementation of the “opens”

Open banking, open finance, open insurance, open health, open data, open everything. Yes, you’ve probably come across these terms that didn’t exist until recently, and you certainly are or will be directly impacted by the changes that such “opens” propose.

This article aims to break down the concept of Open Insurance, presenting its biggest challenges, the value it generates, the advantages for consumers and insurance companies, but also the criticisms of open insurance, the concept of figital and what user experience (UX) has to do with all of this.

“In an increasingly digital world, whoever has the data is king.” Or, “against data, there are no arguments.” These and other phrases, adapted from popular sayings, summarize well how digital transformation has changed our relationship with our information and personal data.

Through data analysis, it’s possible to create predictive models of almost anything you can imagine, anticipating consumption behaviors, environmental crises, or even elections, for example.

In this context, “open everything” was born, or “open any market segment.” According to SUSEP – Superintendence of Private Insurance, Open Insurance, or the Open Insurance System, “is the possibility for consumers of insurance, open supplementary pension and capitalization products and services to allow the sharing of their information between different companies authorized/accredited by Susep, in a secure, agile, precise and convenient manner. To deliver these benefits to the consumer, Open Insurance operationalizes and standardizes the sharing of data and services through system opening and integration, with privacy and security.”

So! Based on the SUSEP concept, the federal public administration agency responsible for authorizing, controlling and supervising the insurance, open supplementary pension, capitalization and reinsurance markets in Brazil, and responsible for implementing Open Insurance in the country, we can glimpse, even superficially, the quantity and depth of the challenges for implementing such a project.

We list the 3 main challenges for implementing Open Insurance in Brazil:

• Data security and protection. The General Data Protection Law – LGPD, the law that regulates personal data processing activities (and that amended articles 7 and 16 of the Internet Civil Framework), is still in the implementation phase by companies and public institutions. Ensuring the security and protection of insurance users’ personal data will certainly be a challenge for implementing the project at the national level. This includes, for example, ensuring that customer data is secure, and only shared with consent;
• Data mapping and system integration. If you’re from the technology world, you know very well the importance of a good API and of middleware services. Roughly speaking, and respecting poetic license, systems speak different languages, store different information in different ways and in different places. Therefore, standardizing such information and integrating systems so that all insurance companies operating in Brazil can communicate effectively are major challenges. Data mapping is one of the biggest challenges for implementing this ecosystem in the country because, currently, insurance clients’ data is scattered across several legacy systems, in each one of the insurance companies;
• Meeting deadlines. Time is indisputably the most valuable asset in the world. You can’t buy time or store it. The implementation of the Open Insurance ecosystem, according to the SUSEP website, is divided into 3 phases, each with its own deadlines. In the first phase, called “open data,” the deadline ends in June 2022. Next we have phase 2, “personal data sharing,” with a deadline of June 2023. Finally we have phase 3, “services,” also with a deadline of June 2023, which would ensure that the open insurance ecosystem is completely implemented. However, there is great concern among insurance companies about meeting such deadlines. The request to change the deadline has already been made by some companies, though without success, but with the expectation that SUSEP will give in and extend the existing deadline, and it is real.

Why is Open Insurance important?

After conceptualizing “open insurance” and presenting the main challenges for its implementation, it’s time to understand why Open Insurance is important, and what value it brings to society.

The digitization process in general shortens consumption journeys, optimizes the cost-benefit ratio and generates business intelligence thanks to the correct use of data. In the insurance sector, it couldn’t be different.

With the implementation of Open Insurance, the insurance sector will improve the cost-benefit of operations, bringing greater agility, security and transparency to the customer-insurer relationship. If signing a contract used to take about 15 days on average, in the digital environment this can take just a few hours, or not even that.

Therefore, the simpler your offering process is and the better the user experience with the insurer’s system, the higher the probability of conversion will be, that is, of a new customer.

On the other hand, the technology behind this must offer an infrastructure capable of processing an extremely high volume of data with agility, fluidity and with fewer and fewer frictions or errors.

In other words, technology will play a fundamental role in the sector’s innovation and along the customer’s purchase (and repurchase) journey.

What are the advantages of Open Insurance for consumers?

By now you have understood the concept of Open Insurance, its main challenges, and you were also able to see some of the benefits for clients and insurers with the implementation of this ecosystem.

We list below, briefly, some of the advantages of Open Insurance for insurance consumers:

• Greater clarity about which personal information is being exposed and shared, as well as the manner in which such information is being exposed;
• Consumers will have greater autonomy when choosing (or canceling) an insurance policy. Through a consultation dashboard with all the insurance information, prices and conditions, the client will find it easier to make decisions (since insurers expose such information in the most friendly and intuitive way possible, making the user experience easier);
• Increasingly cheaper and higher quality insurance. With the transparency of information being one of the main pillars of Open Insurance, competitiveness among insurers will increase, and consequently the fight to improve their services, brand experience and insurance values will be some of the competitive advantages that can attract or push away clients.

What are the advantages of Open Insurance for insurers?

Right! And what about the companies? What will be the advantages for insurers with the implementation of Open Insurance? We answer below:

• Greater competitiveness among insurers can also be seen as an advantage for insurance companies. Where there is competition, there is also greater effort to improve the quality of the service provided and to ensure competitive advantages that are perceived as positive by clients. Based on the insights offered by competition analysis, thanks to the transparency of information, insurers will be able to improve their products and services, as well as reduce their costs;
• Data that becomes information, which in turn becomes knowledge, and which, when well applied, generates competitive advantages. By studying the information released by clients, insurance companies will also be able to create new products, services and business models, expanding the revenue that was previously composed only of “shelf products”;
• Less dependence on insurance brokers and physical stores. What some may see as negative, others may see as positive. With digitalization, the need for physical spaces decreases, and consequently the operating costs of insurance companies are also reduced. Furthermore, with a digital system focused on user experience, insurance consumers will have greater autonomy, not necessarily needing the help of insurance brokers.

So! Since we talked about insurance brokers, we ask ourselves:

How do insurance brokers fare with the implementation of Open Insurance?

Here we present the concept of Figital, which is basically the union of the word “physical” with “digital” (creative, isn’t it?!). The Figital concept can be applied to the most diverse market segments, to different business models that use physical and digital environments to promote their value proposition. In this way, public service, for example, can be carried out in both environments.

Figital will be the brand of the Open Insurance business, because the broker will be at the center of analysis about the best product for their client, as well as continuing to assist in the case of claims, but also in monitoring the client’s journey from policy contracting to renewal, including necessary modifications during that period”.

But really?

Will insurance brokers still have space in this digitalized environment?

Will clients need brokers to contract or cancel their insurance services?

Certainly yes, but with caveats that can only be seen once the entire Open Insurance ecosystem is completely implemented.

What are SISS in Open Insurance?

It is the Insurance Services Initiating Society, already regulated and since November 2021 available for the accreditation of interested parties with Susep. According to the Director of Susep, Vinícius Brandi, “SISS are a fundamental component of Open Insurance which, together with the other members of the insurance market, will bring more innovation and efficiency to the sector through the new technology solutions and the shared data usage that will be responsible for the emergence of new services and products that best fit consumers’ needs”.

Resolution CNSP No. 415/2021 determines that they are participants of Open Insurance and brings the following concept of one of the companies present in this new system:

• Insurance services initiating society: a corporation, accredited by Susep as an Open Insurance participant, that provides data aggregation services, information and control dashboards (dashboards) or, as the client’s representative, with consent given by them, provides transaction initiation services, without ever holding the resources paid by the client, except for the possible remuneration for the service, or received by them.

The superintendent of Susep, Solange Vieira, believes that the changes will bring great advantages to the various market players: insurers, brokers and consumers. “SISS appears in the Open environment as a service provider that has long been used by the insurance market – the Insurtechs. The big difference is that SISS is obliged to operate in an “open” environment and interconnect all players, without restrictions or choices,” she explains.

What is the objective of SISS?

To contribute to the expansion and efficiency gains of the market, aggregating data that can be used to develop new products.

Who can become SISS?

Under Susep’s proposal, insurers, brokers and brokerage firms will be able to become SISS; for this, they will need to meet some accreditation requirements, such as:

• Signing an adhesion term with Susep;
• Meeting financial requirements: Having a minimum net equity of R$.1000,000.00;
• Meeting the requirements regarding governance, data and information confidentiality and cybersecurity in accordance with Resolution CNSP No. 416/2021, PLD/FT and LGPD)
• Meeting the requirements regarding conduct practices and adequate client treatment in accordance with Resolution CNSP No. 382/2020
• Ensuring Susep full access to the information held by them or by third parties contracted by them to carry out their activities.

On the other hand, SISS are not allowed to:

• Retain any insurance risks;
• Operate open supplementary pension plans;
• Issue capitalization bonds.

SISS and Open Banking

SISS can also be accredited as payment transaction initiating institutions, under the terms of Open Banking regulation. In this case, the minimum net equity required by SUSEP must be complementary to that required by the Central Bank of Brazil.

What about the accreditation exemption?

The supervised companies participating in Open insurance (Insurer, open supplementary pension entity or capitalization company) can provide initiation services independently without needing accreditation, only needing to communicate to SUSEP the intention to provide this service 90 days in advance.

The accreditation of a SISS must be renewed at least every 5 years. Now, regarding the suspension and cancellation of accreditation:

The accreditation will be canceled if:

• Proven losses occur to clients;
• Failure to comply with the requirements provided in art. 14 or Annex I;
• Evidence of unlawful practice through intent or fraud;
• Relevant or repeated failure to observe the requirements established in this Resolution;
• Falsehood or serious omission in the statements or documents presented in the process instructions;
• Situations that may affect the reputation of the SISS or its administrators;
• Failures or violations in the cybersecurity and data protection system; or
• Any act, omissive or commissive, that contravenes a law or infra-legal norm, considered a harmful act.

The accreditation will be suspended if:

• The SISS may have its accreditation suspended, as a precaution, in case of imminent risk or loss to clients or when, after notification by Susep, the company fails to implement the necessary corrective measures or fails to suspend practices that conflict with the requirements established in the applicable legislation.

About PDL No. 1073/21

On 24/11/2021, a draft legislative decree (PDL No. 1073/21) was filed that revokes Resolution 429/21, of CNSP, of November 12, 21, which establishes the requirements for the accreditation and operation of insurance services initiating companies (SISS) within the scope of the Open Insurance System (Open Insurance).

What are the criticisms of Open Insurance?

By now, you must be imagining that Open Insurance is a bed of roses. However, like almost everything in life, we can analyze it from a more critical point of view. Next, we list some criticisms of Open Insurance raised by stakeholders impacted by this change:

• Despite showing itself favorable to the Open Insurance model, the National Confederation of Insurance Companies (CNSeg), which encompasses more than 180 companies and service providers in the segment, criticizes the deadlines and rules stipulated by SUSEP. The entity believes that the one-year interval for companies to adapt is not enough to handle the changes in technology, systems and internal governance necessary to protect users’ data in the context of Open Insurance.
• As we saw earlier, there is still a gap to be filled regarding the role of insurance brokers once Open Insurance is implemented.
• Greater competitiveness, but with fewer players. Will all insurance companies, even the small and medium ones, have the financial and procedural capacity to implement all the details of Open Insurance? Maybe not, maybe yes.
• Dependence on the digital space. Unfortunately, not all people have access to information technologies, and many have little familiarity with digital systems. Will Open Insurance be more inclusive or will it become increasingly exclusive?

User Experience (UX) and Open Insurance

Right! But where does user experience (UX) come into all this? Here we go! Responsible for the interaction between an individual and a digital product, service or brand, User Experience is a concept that has become indispensable in digital applications and businesses.

The concept was born in the 90s and was created by Donald Norman, while working at Apple.

The idea of UX permeates the entire client journey with a product or service, from the first contact with the brand, through consumption, and reaching the post-purchase stage.

Thus, user experience, as the name suggests, focuses entirely on the user’s perception and usability. Intuitive, easy-to-use digital platforms that induce certain user behaviors desired by the company (such as buying a certain product, or clicking a certain button) are the ones that survive.

In the insurance market, and in all sectors impacted by digital transformation, the concern about user experience will be increasingly relevant for achieving companies’ strategic objectives.

Insurers that offer the best experience with their digital products will certainly have on their side a great competitive advantage that can determine success or failure with the Open Insurance changes.

Conclusions

To conclude this article, we reach the following conclusions, separated into topics:

• Information security is the biggest concern of stakeholders when we talk about Open Insurance;
• The insurance market in Brazil is still small when compared to other countries, so, with Open Insurance, there is an expectation that there will be an increase in the insurance market, an increase in client adhesion.
• There are many challenges to be completed before that: Open Insurance is not yet fully structured. There are points of doubt about how brokers will fare, and a lack of a more concrete definition of the roles of SISS (Insurance Services Initiating Society) and what they actually are;
• SUSEP has not yet made available service channels for insurers to resolve doubts;
• Phase III is a poorly detailed phase, and SUSEP was unable to release comprehensive content as Bacen did with Open Banking, and, with that, insurers still don’t have clarity about everything they need to do, and how to do it;
• There is an expectation and desire on the part of insurers for the deadlines to be changed, however, SUSEP does not guarantee this change and has already refused it several times.
• The experience users have on digital platforms dictates the success or failure of a business, and with insurers migrating to Open Insurance it won’t be different. Insurers that ensure the best digital experience for their users will guarantee a larger client base and consequently greater revenue and sustainability over the years.

This article was developed by Iza Neves, Open Insurance product specialist at Zappts.

About Zappts

Founded in 2014 by Rodrigo Bornholdt and Pablo Augusto, Zappts carries out the digital acceleration of major brands with high-performance teams. Focused on software development, especially in Front-end, UX Design, Quality Assurance and Cloud Environments Management, it works in the planning, management and operation of corporate digital solution development services, environment management and knowledge transfer through information technology. A reference in creating digital experiences for users, in addition to developing innovative and fast solutions, the company operates on a 100% remote model, with teams distributed across more than 17 states in Brazil.