APIs – Key Enablers of Digital Transformation in Insurance

In today’s increasingly interconnected digital world, staying relevant and competitive is a constant challenge for businesses across the board. Ever-changing market demands are driving enterprises to embrace digital transformation—leveraging advanced digital and data technologies—for ubiquitous connectivity and seamless flow of data/information through the entire business value chain. At its heart, digital transformation enables enterprises to create new or modernize existing business processes/systems and enhance customer experiences.  With connectivity now setting the terms of the game, adoption of APIs (Application Programming Interfaces) constitutes an essential component of a winning digital strategy. 

The Role of APIs in Insurance

Nowadays, insurance customers prefer digital transactions and demand better communication. In order to adapt to the changing times, the majority of insurance companies now prioritize keeping up with technology innovations and investing in digital transformation for business growth and success. A recent research study by Celent found that digital transformation is a priority for 93% of insurers looking to meet customer needs.

Though APIs have been in use across industries for decades, insurers are only now tapping into the power of APIs to drive innovation and meet the demand for exceptional digital experiencesThe insurance industry has long been hindered by manual processes, legacy systems, and complex workflows.  APIs allow insurers to create connectivity and facilitate interactions among applications and devices by providing a standard way (protocol) to access data—whether on cloud or in-house—from any app or device.  This helps insurers turn repetitive but complex processes into highly reusable ones that drive productivity. 

API Enabled Connectivity for Insurance Digital Transformation Infographic Figure

API Use Cases in Insurance

  1. Easy Claims Processing
    Today’s consumers don’t want to deal with phone calls or paper documents—especially when it comes to filing an auto insurance claim. By combining the GPS functionality of mobile devices with the availability of third-party APIs, insurers can offer policyholders the ability to send the location of a car accident, set a timestamp, and submit photos of the damage. In some cases, APIs can help track driving behavior and movement and assist with car breakdowns, accidents, and thefts. Insurers can also use the collected data to preemptively contact the client and arrange medical support, automatically pre-fill a digital claims form (based on ambient data collected before, during, and after the crash), or even identify car thefts when unusual driver behavior is detected.
  2. Customized Product Offerings
    Insurance is a data-intensive business. With all the data generated by devices, apps, and ecosystems, insurers can leverage tools such as artificial intelligence and machine learning to analyze, process and manage the data to deliver customized policy offerings and real-time quotations.  APIs facilitate this process by transferring data quickly and securely within the ecosystem, whenever a customer makes a specific request. For example, when a customer applies for auto insurance, APIs can integrate with an ecosystem to pull up the relevant customer data, then generate applicable insurance quotes, and finally deliver the quotes to the customer.
  3. Better Risk Evaluation
    Through APIs, insurers can access larger pools of data which permits them to provide more intelligent risk evaluation, real-time fact-checking (in cases of fraud) and reduced underwriting times to their customers. A good example is data from wearables; insurers can analyze APIs connected to wearables to measure “invisible” lifestyle factors of customers (e. g. the number of steps, heart rate, etc.) and evaluate risk tolerance, thereby allowing personalized plans that incentivize “low-risk” behaviors.
  4. Drive Business Growth
    The Digital Insurance ecosystem, powered by APIs, has revolutionized the way insurers do business. By tapping into a wider range of business resources, partnering with third-party providers, and integrating data with other players in the ecosystem, insurers can gain access to new revenue channels and disruptive business models. For instance, an insurer can embed a transactional API into the website, mobile platform, and other digital channels of their ecosystem partners to provide real-time insurance coverage to customers. This way, home, travel, and car insurance can be made available for partners to integrate with their customers’ journeys, streamlining the entire sales lifecycle from prospecting to quote delivery to policy issuance.

The Road Ahead

The modern vision of insurance IT relies on API-led connectivity. For insurers looking to achieve the speed, agility and enhanced digital capabilities necessary for optimizing customer experiences, APIs are a must. As the digital ecosystem further shapes up, the leading carriers of tomorrow will be the ones who leverage (open) APIs to partner or orchestrate in a larger network to deliver a full suite of best-in-class solutions and services.

Ready to start your own API integration journey? Here are 5 essential best practices for API success to get you started. 

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