Blog article

Open insurance offers great opportunities – but also obligations

Jacob Tovborg-Jensen - LB Forsikring blog

Jacob Tovborg-Jensen, Executive Vice President for Data, Technology and Business Solutions, LB Forsikring (Denmark)

31 March 2021

“Open insurance: More data sharing can create a renaissance in the insurance industry, but it can also have a downside,” says Jacob Tovborg-Jensen, Executive Vice President for Data, Technology and Business Solutions at ICMIF member LB Forsikring (Denmark) in an article originally written for Danish financial news website FinansWatch. Jacob’s article has been translated and is reproduced here with the kind permission of LB Forsikring.

Let me start by saying that if you do not evolve, then you are finished. This applies to many things in life, but also to the insurance industry. Therefore, I fundamentally believe that everyone should embrace new, exciting initiatives such as open insurance.

It is, of course, easier for me to believe in when openness is a core value of LB Forsikring, and not least when our main purpose is: “To make insurance redundant together”.

However, this does not change the fact that here at LB Forsikring we see great opportunities in a future where we in the insurance industry share more knowledge than we do today.

Predicting and preventing damage requires access to large amounts of data – even more data than we can immediately get from our own members. And the solutions to achieve the goal of better prevention probably come from companies that are able to see new contexts in our data and therefore offer our members new solutions that we do not have the imagination or capacity to develop ourselves.

That is why here at LB Forsikring we do a lot to create partnerships with many different types of companies. And this is where open insurance really comes into the picture, as the initiative can help ensure that data is made available across the industry. At the same time, if we embrace open insurance instead of dragging our feet on this, we can ensure that there are industry standards for data exchange via the so-called application programming interfaces (APIs).

Data sharing must provide equal opportunities

For us at LB Forsikring, there is a one-to-one connection between those who give us access to analyse their data and those who ultimately get the value back; namely, the members. However, there are also pitfalls for members if we are not careful.

The opportunities that open insurance creates in relation to data sharing across industries and value chains will lead to increased competition, transparency and better service experiences for the benefit of the consumer.

It is a potential opportunity for a renaissance of the insurance concept; one for all and all for one, which we as a member-owned insurance company support.

However, data sharing also has a potential downside, where the consumer with the worst risks finds it difficult to insure themselves unless some kind of level playing field is established that supports the element of solidarity. Without it, the gain for consumers would be very uneven and would not give them an incentive to share data.

Fortunately, we in the insurance industry in Denmark have a completely unique opportunity to drive the development of open insurance.

Yes, in fact it can be argued that we in Denmark have been a pioneer in open insurance, as we began to exchange data on dismissals, claims, etc between insurance companies through the Insurance and Pension trade association (Forsikring og Pension or F&P) more than 20 years ago already.

Consumer confidence is paramount

In addition to common ground, data exchange requires the trust of consumers that their data be stored and used ethically and properly. In 2020, F&P launched a set of data ethics principles, in which the industry undertakes to treat data ethically soundly.

Together with the EU’s GDPR rules, the set of data ethics principles creates a good framework for ensuring confidence in the use of data, and thus for an initiative such as open insurance to be a success in Denmark. But that trust may need to be stretched if data sharing is to succeed.

In 2019, as an industry we tried to be allowed to share data on cloudburst damage internally, but also with various actors within the supply network who would like to understand and know better where sewers were most often hit hard. This would have a benefit for many citizens in Denmark, but due to the GDPR, that data has still not been shared. There is therefore a need for both flexibility in the framework and for consumer confidence.

However, we are balancing on a knife edge with consumers. In the consulting house Accenture’s global report from January 2021, it can be seen that while 66% of policyholders say they are willing to share data to help prevent injury and loss – 12% more than in 2019; people’s confidence that insurance companies can safely take care of their data has fallen from 40% to 32% in the same period.

We are therefore facing an exciting but complex task if we are to develop open insurance further. However, this is a task that we at LB Forsikring are ready to take on. Because we believe the gains for both consumers and society will be worth the work.

For member-only strategic content on the cooperative/mutual insurance sector, ICMIF members have exclusive access to a range of online resources through the ICMIF Knowledge Hub 

Scroll to Top