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A Deep Dive: The Role of APIs in Revolutionising Insurance

The insurance industry is currently in the throes of widespread evolution as we speak, with technology and innovation being the key catalysts at the center of the action. APIs or application programming interfaces are enabling a switch towards a more digitised and well-integrated experiences for customers. They help in bridging the gaps between unique services and applications, helping them collaborate in a better manner. Let us take a closer look at how they play a vital role in completely revolutionising the insurance industry today.

A Closer Look at APIs

Here’s how APIs are enabling an insurance transformation in multifarious ways.

• They help in building omnichannel experiences for customers along with digitising operations, while enabling the extraction of precise data whenever required.
• These are a set of rules that are defined, thereby facilitating various applications to smoothly communicate with each other. They enable specific data collection procedures and present the same in an easy-to-understand format.
• The insurance industry earlier leveraged CRM systems that could store and deliver practical yet accessible data. However, with industry expansion, data compilation, extraction, and deployment majorly depended on manual efforts. This is where APIs provide solutions through automating various human tasks.
• They work in the manner of translators, helping applications to easily collaborate and interact, setting up connections between multiple and discrete applications.
• These include linking rating applications to internal systems for generating documents or integrating with third-party vendors.

How APIs are Benefiting the Insurance Sector

Here are some ways in which proper API management has a positive impact on the insurance sector.

• Better underwriting through access to diverse data sets for quicker procedures.
• Streamlined applications through reducing quote timelines, pre-filling data, and enhancing accuracy.
• Creating a secure technological foundation for insurance companies to integrate with newer ecosystems.
• Smooth low-touch processing across new markets, while engaging more technical partners to facilitate secure and optimised integration for various requirements.

How APIs Can Be Deployed Throughout the Insurance Industry

Here are some use cases that you should know more about.

• Better management of claims- In 2020, U.S. casualty and property insurance entities discovered how 70% of premiums received were allocated towards investigations, paid losses, and costs of settlements. Hence, improving claims management is a necessity for insurance companies. APIs work smoothly in streamlining the management of claims, enabling quick access to verified data, while mediating and lowering the issues in interactions among stakeholders. They can also readily access disparate industry systems for getting crucial data while building digital connections between third-party adjusting firms and carriers alongside. For insurance carriers, they can boost customer experiences and satisfaction for enhancing retention rates considerably.
• Implementing IoT- APIs can help in tapping the IoT suite of features for insurance companies, thereby enhancing access to valuable customer insights. Insurance companies can obtain extensive customer data, thereby enabling a better understanding of client requirements and behaviors. These insights facilitate more accurate assessments of risks along with enhancing underwriting and decision-making accordingly. APIs and IoT also ensure personalised insurance plans, including pay-as-you-go solutions, individualised plans as per usage patterns, and more. Real-time alerts also beef up the abilities of insurance companies to find and combat fraudulent claims.
• Boosting customer experiences- APIs have considerably revamped customer experiences, integrating easily throughout multiple digital services and platforms, while helping policyholders access data, file claims, and manage policies better. This boosts customer satisfaction greatly and when they combine with Chatbots, they enable easy capturing and storage of customer interactions. It may be analysed for improving responses and service quality.

Why Open APIs Matter

Here is a closer look at the importance of open APIs in the insurance industry.

• They enable insurance companies to access a bigger data range.
• Insurers can also understand customers and their requirements better, while creating new services and products tailored to the same.
• Insurance companies can smoothly collaborate with other entities or developers to build personalised products and services for higher market competitiveness.
• Chatbots can be used for enabling customer support instantly, leveraging NLP (natural language processing) and AI (artificial intelligence) to simulate human conversations. They may be integrated with multiple platforms like social media and messaging apps.
• Data analytics are also being used for enabling a higher understanding customer preferences and requirements. This helps identify more trends and patterns for the creation of customised services and products.
• Open APIs are also enabling improvements in the efficiency and speed of industry procedures, including policy management and claims handling. These procedures are automated and streamlined, enabling a reduction in costs and more operational accuracy.

Signing Off

Open APIs are already being leveraged by leading insurers for unlocking innovation and business growth alike. Allianz, for instance, has created its own platform enabling third-party developers to build new services and products on top of its existing solutions. AXA has also created a similar platform enabling developers to get access to data from its insurance products. They can thus create newer services and products that are in sync with specific customer requirements.

APIs are also enabling insurance sector digitisation while simplifying more repetitive and complex tasks for boosting productivity. They can ensure automatic assessment of damages with quick processing, especially via technologies like spatial analytics technology, video data and image labeling, AI, and more. Underwriting models are improved considerably where data is easily retrieved in real-time from the source, enabling that they account for updated information. Insurance companies thus benefit from time savings with regard to the extraction, sorting, and analysis of bigger data sets. They make a compelling case for insurance companies looking to embrace the new wave of digitisation and stimulate growth in a highly competitive global market.

FAQs

1. What are APIs, and how do they relate to the insurance industry?

APIs are application programming interfaces and they are related intrinsically to the insurance industry, working as translators and bridges between disparate applications. They enable their smooth collaboration and interaction for enabling wide-ranging customer and insurer benefits.

2. How do APIs support innovation and collaboration in insurance?

APIs enable higher collaboration and innovation in the insurance sector, where companies can create dedicated API platforms. Open APIs will enable them to collaborate with other developers and entities to build more personalised and efficient products and services, while bringing them swiftly to the market.

3. Are there any challenges associated with API adoption in insurance?

Some of the challenges include dealing with legacy systems and the costs involved in the creation of custom APIs. Other challenges include skill development and training of the workforce, along with the integration of new technologies into older systems.

4. What are the benefits and drawbacks of open APIs for insurance companies, fostering innovation vs. potential security risks?

The benefits of open APIs are numerous as far as insurance companies are concerned, including wider access to data, creation of more personalised products and services, improved underwriting, and better customer support. The only drawback is that API infrastructure may sometimes be vulnerable to breaches of security, including SQL injection and XSS (cross-site scripting) attacks. Safeguarding valuable customer data and implementing consent mechanisms are also some challenges that insurers have to tackle in this regard.

5. How will the use of APIs change the role of insurance agents, with a potential shift towards a more consultative approach?

The use of APIs in the insurance industry will play a crucial role in the digitisation of operations, thereby enabling agents to function in an omnichannel ecosystem, while accessing precise data whenever required, and offering the same in a more user-friendly and understandable format to their prospects. The approach will be more consultative in nature, with agents being able to collaborate seamlessly across platforms and offer more personalised services and support to their customers.