Open Insurance should lower insurance costs and increase supply, but suffers criticism – Prime Time Zone


New service that shares policyholder data will go into effect in December; confederation of companies says that deadline is insufficient to guarantee the security of information

Kalhh/PixabayEnabling Open Insurance will increase access to insurance services

O insurance market Brazilian is preparing for a series of changes that promise to increase the variety of services, offer higher quality products and lower costs to consumers. Controlled by Superintendence of Private Insurance (Susep), O Open Insurance, or “open insurance”, in free translation, will allow companies and cooperatives to share customer data with each other — subject to express authorization for such exposure. The “democratization” of this information multiplies the relationship options between service providers and consumers. Among the advantages pointed out by enthusiasts of the idea is the possibility of offering specific products, based on individual data, such as credit card expenses, marital status and family composition. THE technology it will also change the ways in which insurance is purchased, bringing greater competitiveness to the market. As well as the Open Banking, the program controlled by Banco Central (BC) and authorizing the exchange of customer information between financial institutions, the Open Insurance will be enabled in a staggered way. The implementation of the system was divided into three phases, with the first in December this year. Completion is scheduled for December 2022. The adaptation period is the main criticism of the new system. For specialists, a year is not enough for the technology to be absorbed by the market, which can harm the effectiveness and safety of the model. Check out the main points below to understand the new technology:

What is the Open Insurance and how will it work?

SUSEP, linked to the federal government, defines the Open Insurance as “an environment that enables standardized sharing of data and services through openness and integration of systems. The operationalization of this sharing is achieved through the establishment of technological standards”. In a practical way, this means that entities that provide insurance and pension services, such as companies, insurance companies and banks, will “open” customer data on a platform so that everyone has access to the information. According to SUSEP, this movement leads to an increase in innovation and quality to the sector. “The system will bring more competition, from a standardized environment of companies that will allow companies to more easily seek new niches, consumers, and innovation, generating benefits for customers”, informs Susep.

What data will be shared?

As with all other platforms and entities that gather data from third parties, the Open Insurance must also fit the General Data Protection Law (LGPD), which requires the adoption of safer and more transparent processes for the treatment, protection, sharing or disclosure of personal information. In general terms, the data will only be shared between the insurance providers with the authorization of the customers, who can partially or totally veto the information’s exposure. “In order to share, the consumer will indicate which data will be shared between the transmitting and receiving society. The environment will verify and authenticate the receiving society, as a participating society, and there will also be the authentication of the consumer itself, in addition to a sharing confirmation step. All these steps will provide the security and privacy necessary for data sharing and will be done in an agile and convenient way for the data subject”, according to SUSEP.

What are the benefits for companies and customers?

Service providers will have available data from competitors, and so they can offer better products and more attractive prices to “steal” customers. At the same time, they will also have their data exposed, which should force the improvement of services so that their users are not targeted by other companies. For Carla Nabarrete, marketing director of insurance manager Wiz Soluções, the changes will impact the sector’s growth. “The insurance market can be bigger as soon as companies are able to offer something that makes sense to consumers and create the possibility of offering a super-segmented product”, he says. At the other end, she says that the changes bring more “empowerment” to customers when searching for an insurance service. “The system will democratize access to more suitable offers and price comparison. These changes lead to price reductions for those purchasing the service“he says. According to João Bosco, CEO of the digital solutions platform GR1D, the changes could also change the way companies offer their products. “In some moments, the sale of insurance is provoked at the wrong time. For example, travel insurance should not be offered at the time of ticket purchase, but at the time of boarding. So the conversion rate would be much higher. The new technologies and regulatory models that SUSEP is allowing will create this type of impact”, he says.

What are the main criticisms of the Open Insurance?

The National Confederation of Insurance Companies (CNSeg), which brings together more than 180 companies and service providers, is in favor of the new model, but claims that the qualification is being done wrongly. For Marcio Coriolano, president of the entity, the one-year interval for the adaptation of companies is small in view of all the challenges. “Something so complex can’t be in a hurry. These are changes in technology, data systems and even internal governance to protect this information. Running with these steps can harm the effectiveness and security of the system”, he says. The entity also criticizes the exclusion of insurance brokers from discussions for changes. “Many people do not have access to internet or all this technology from Open Insurance. It is necessary to have someone who can help them, and we plead for the insurance broker to be one of the agents that should participate in this system”, says Coriolano.

When the Open Insurance will be available?

As well as the Open Banking, the program controlled by Banco Central (BC) and authorizing the exchange of customer information between financial institutions, the Open Insurance will be enabled in a staggered way. SUSEP divided the implementation into three phases, distributed between December 2021 and December 2022:

  • The first phase only foresees the sharing of some public data of the companies, ranging from their service channels to information about their products;
  • The second phase provides for the sharing of personal data of consumers and is expected to start in September 2022. In this stage, consumer information will be shared – upon authorization – related to registration data, insurance products they have and their use of them;
  • And finally, in the third phase, scheduled for December 2022, insurance services can be started by consumers in the Open Insurance, another point of similarity with the Open Banking.