Open Insurance is coming! What do insurance companies need to know?

On 24 January 2022, the Australian Government Treasury released a report on outcomes from the Consumer Data Right (CDR) Strategic Assessment. The ‘ Strategic Assessment Outcomes Report’ identifies ‘ Open Finance’ as the next priority area to expand the CDR. This exciting announcement ends speculation as to whether the general insurance sector will be designated. What does this all mean for insurers, brokers and insurtechs?

What is open insurance?

We’ve been talking about open insurance for a while now, so you can check out this article I published last year for the low-down. In a nutshell, open insurance covers ‘accessing and sharing insurance-related personal and non-personal data usually via APIs’ (EIOPA definition).

Open insurance will enable consumers to direct the sharing of their insurance data to other insurers or intermediaries. Open insurance may therefore facilitate the sharing of data between competitors but also potentially with aggregator services, price comparison websites and financial ‘dashboard’ style apps.

If you are interested in learning more, check out this podcast where I had a chat with Brenton Charnley, CEO Australia & NZ at TrueLayer about Open Finance & Open Insurance.

What did the Strategic Outcomes Report say?

The Strategic Outcomes Report provides some insight on the path ahead.

To date, the CDR rollout has been subject to specific sectors: banking, energy and telecommunications. But not any more. Interestingly, the proposed approach is focusing on ‘Open Finance’ comprising four sectors:

  • general insurance;
  • non-bank lending;
  • merchant acquirers; and
  • superannuation.

First phase assessment and designations are targeted for early 2022. Once designations are made, it will be time to get to work to design the rules. Potentially a very busy year ahead for all involved!

Concurrent designation — what, why and how?

According to the Strategic Outcomes Report, the rationale for this is to enable concurrent designation of datasets across multiple industries. It is expected this will enable the CDR to create a broader range of higher value use cases. The report gives this example, and I generally agree it’s time to give this a go:

For example, combining a few key datasets in superannuation and general insurance would support applications that provide consumers with a richer picture of their current and expected financial circumstances and will support improved financial planning, and key life decisions such as asset purchases, preparing for retirement or change in employment circumstances while balancing implementation considerations.

CDR Strategic Assessment: Outcomes Report

Specific reference to general insurance was made in the report, noting there might be a focus on ‘product/attribute data’ for general insurance to start with, as well as government held insurance data. Price comparator website Finder noted in its submission that home and car insurance were pressure points with high switching costs, and suggested priority be given to these insurance categories.

What next?

It’s exciting to see the CDR finally expanding to Open Finance. After all, I’ve been waiting for this moment for years. But there is still a lot of work to be done — this is just the beginning. And as I noted in this article, open insurance comes with its own challenges.

I’ll be sharing more on Open Insurance in the coming weeks.

Want to hear more? You can subscribe to my personal blog for the latest updates and thoughts.

Tim Chan is an insurance & insurtech lawyer at global law firm Norton Rose Fulbright and Founder of The InsurTech Lawyer blog. He regularly advises insurers and startups on emerging legal issues affecting the industry. Follow Tim on Twitter: @timinsydney

Originally published at https://theinsurtechlawyer.com on February 3, 2022.

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Open Finance ANZ is all about growing and supporting the Open Finance community and advocating for a regulatory and technology environment that supports innovation and injects competition that will give consumers increased control over their financial lives.

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Tim Chan

Tim Chan

Photographer 📷, booklover 📔, tech geek 👨‍💻, insurance nerd ☂️ and #aussie #insurtech lawyer

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