The CTO’s homework: How to develop new digital business models, customer-centric offerings, and other no-brainers (for the insurance industry). We asked Martin Thormählen 7 questions about his challenges as Chief Technology Officer of Munich Re, the digitalization of the insurance industry, and the associated central role of API marketplaces.

1. What specific challenges does a CTO in the insurance industry currently have to deal with?

At Munich Re, we continuously drive digital transformation throughout the Group and simultaneously develop new business models with innovative partners, both internally and externally. Top of mind is always the clever usage of data – to avoid all buzzwords – to either derive insights or create value-added services.

With my extremely forward-thinking team, as Munich Re’s CTO, I’m all about building new customer-centric offerings while keeping data privacy and compliance at the heart of all undertakings. On the technical layer, we grow our capabilities to connect our solutions with selected partners.

In a nutshell: As CTO I want to ensure at all times that Munich Re is able to leverage data at scale and to onboard new distribution partners or services quickly – 100% secure and compliant, and to offer our services with a seamless experience for customers.

2. How are those challenges connected to Munich Re’s latest investment in the API-Insurtech apinity?

Munich Re decided early that we‘ll need an API Gateway and an API developer portal – globally. Now our list of modern external and internal services has grown as expected. That was why it was the right time to finally invest in apinity to be able to build a professional marketplace and offer our services to our customers. With apinity, we will also establish a better internal developer portal that will not only support usage but additionally foster the creation of new services.

3. As CTO, how does apinity’s API Marketplace solution contribute to the Munich Re strategy?

The Munich Re Group Ambition 2025 will unfurl in accordance with the three guiding principles of Scale, Shape, and Succeed. We set the scale goals to grow the core reinsurance and primary insurance business. Our business colleagues do a fantastic job of making this a reality. In addition, we have set the shape goals to create new digital business models – in insurance and beyond.

apinity is a perfect fit for both and a precondition for our successful goals to be an attractive employer where business and IT colleagues find the right services at their fingertips with concise documentation. This will be attractive for our customers too.

4. What opportunities and competitive advantages do you see emerging for other insurance companies (e.g., embedded insurance) due to such API Marketplace solutions?

Insurers create a competitive advantage by exposing relevant APIs in a cyber-secure manner to distribution partners, MGAs, TPAs, or other business partners. For a couple of years, we have known that embedded insurance is one of the most convenient options to get protection seamlessly – in personal lines products like motor, household, travel, gadget, etc. Carriers need to be able to expose their sales journey via APIs.

Some carriers might have on top a huge dataset and can derive values from it. While some data, scoring, risk evaluation, or others will only be used internally and not shared with potential customers, other data-driven services can generate new revenue streams.

Everyone’s homework is: Does your organization know all your internal APIs? Have you ever tried to combine them differently? Could you save a lot of money if multiple data capture could be avoided via clever usage of internal APIs? You all know the famous Jeff Bezos memo, right?

5. Why have you decided not to build an API Marketplace solution in-house, and what would you recommend other insurance companies do?

We focus our internal development team on building high-value services, and we avoid having high spending on maintenance efforts. apinity provides us with precisely that: You have done all the heavy lifting of building the marketplace, including metering and billing capabilities, the mandatory cyber and data privacy protection.

If I were a manager at a primary insurer, I would leverage apinity and focus on building services, publishing them, nurturing internal usage, and going to market too.

6. APIs can significantly change entire business models. Did you have to convince your non-IT business colleagues to open up to this rather classic IT topic as well?

• a. And if so, how did you succeed?
• b. How do you explain the importance of an API marketplace to non-IT colleagues?

That’s a great question that takes me back to the beginning of business development: The topic of digital business models, API economy, ecosystem, and more was actually a training course for client managers and underwriters to educate our business units. Today every business unit within Munich Re has business developers. We‘ve built API-driven pricing and underwriting services next to risk scoring services and more. I think it‘s fair to say that the value of APIs and the business potential is nowadays a no-brainer – and we will still write a lot of business without the usage of APIs. We still have a huge potential for much more API-driven revenues.

7. Based on Munich Re’s tech trend radar: What does the insurance world of the future look like?

We had Open APIs, API economy, Digital Ecosystems, and other API-related trends on the Munich Re Technology Trend Radar in previous years. We‘ve set them all to adopted as we had evidence that the industry knows about them – even if it hasn’t been implemented everywhere.

The insurance industry will become even more and more interconnected with its partners. The days of painful data extraction from PDFs with embedded Excel Sheets are definitely coming to an end. In the indispensable “new normal” we‘ll share data via APIs only. The future API Marketplaces will enable a smooth transition from our outdated now to a seamless and frictionless future.

Note: The interview with Martin Thormaehlen was conducted by Leander Lork, apinity GmbH.