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CDR to boost insurance image: Insurtech Australia

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Extending the Consumer Data Right (CDR) regime to insurers could help address the industry’s “major image problem with consumers” and tackle the challenge of underinsurance with greater transparency, clarity of options and understanding of what is being covered, Insurtech Australia says.

CDR – more commonly known as Open Banking – aims to give consumers greater say over the access and use of their personal information by businesses and may allow consumers to access specified data held about them by insurers, and to authorise the secure disclosure of that data to third parties.

It was introduced to banking in July and is pegged to soon be applied to other sectors such as telecommunications and insurance.

Outgoing Insurtech Australia CEO Rita Yates says insurance should be “at the top” of additional sectors identified as likely to see a major positive impact from data sharing.

“A priority use case for Open Insurance that would benefit consumers would be providing the ability to make accurate product comparisons through a third-party site/provider by importing the consumer’s data held by their current insurer, a service that is currently very limited,” said Ms Yates, who handed the CEO mantle to Simone Dossetor this month.

“Australia has the ability to be seen as a global leader in the introduction of CDR into insurance and other financial services and this will drive innovation and technological productivity.”

The combination of data sets from different sectors may allow insurers to innovate in the pricing, product design and distribution of insurance and to “create whole new business models” based on data shared.

Open Insurance would “vastly increase” the consumer’s understanding of the coverage that is available and ensure they are making useful like for like product comparisons and the same datasets would be used by insurance providers to price and present an insurance offer for comparison purposes, Ms Yates said in a blog post.

Insurers could differentiate more through customer service and risk reduction support and strategies as opposed to “just simple levels of coverage and price,” she says.

“The consumer would be in the driver’s seat in terms of telling insurance providers what they require and they can share the data held by their insurer to accurately disclose information about their prior claims history and other information relevant to the risk,” Ms Yates said.