What APIs mean for an open and connected insurance industry
Client expectations are growing and they want to realize everyday value. Many insurance companies are taking steps to use application programming interfaces (APIs). Building upon internal APIs for backend communications that have been in place for a while, but now the focus is on opening up APIs to the outside world to offer better services to policyholders. Call it connected insurance, Open Insurance, or open APIs - whatever the name, it all relates back to finding a common approach to securely share data that drives value.
Open APIs can enable microinsurance, plug-and-play solutions and ease administrative processes like providing customers options such as the electronic signing of documents. A robust API ecosystem is a prerequisite for developing flexible platforms that provide hyper-personalized services to customers.
For instance, UPS Capital insurance vertical uses a suite of APIs to provide real-time insurance to its customers. Shippers can buy policies, submit claims and receive quick settlements through its in-house management system.
‘Open insurance’ is a new way of doing business by sharing and consuming data and services with third parties by using application programming interfaces (APIs). It offers insurers the opportunity to enhance their products and increase revenue streams.
One way for big-brand insurers to deliver on this demand is to provide incentives that hit home with policyholders. Without open APIs, though, it can be difficult to track and verify a customers’ adherence to the deal. That problem might be solved by connecting their clients’ fitness apps to their legacy systems via an open API - which is any API that an organization makes accessible to third parties.
Traditional insurers are tied to the open API economy as much as any other industry - and if they don't get it right, they won't be able to keep pace with the insurers that do.
Ten years ago, insurers feared the insurtech disruption, and now they are seen as potential partners and a way to incubate new ideas.
More and more insuretechs are given access to insurers' open APIs, scrubbed clean of policyholder data, to develop innovative apps that can help differentiate the incumbents in the market.
This approach relieves some of the app development burdens that are placed on big insurers’, and it positions the startup to have a stronger partnership with the vendor, and even perhaps position itself for a potential acquisition.
What are the business benefits of APIs?
At the top of the list are big process improvements, greater efficiencies, and faster innovation.
Banks have used APIs to become more agile, reduce time to market, and grow their services.
They’re better able to collaborate with partners and sign-up new customers.
Business initiatives that in the past took up to 24 months to launch can now get underway within weeks.
Open APIs unlocking opportunities
An open API network in insurance will allow sharing data not just across different processes within the company, but will also facilitate cross-industry collaborations. This will improve risk management in insurance, create new revenue streams and take digital customer journeys to the next level. Ultimately, insurers need to move towards best-of-breed services to fulfil customer demands. Open APIs can lead this shift from traditional product-centric models to customer-centric models.
Four use cases for open API networks insurance carriers
Better digital customer journeys: A strong API economy can help insurers, as well as agents, create customer-friendly processes. One example of this is the use of e-forms and online electronic signatures. Paperwork and policy documents are one of the most cumbersome aspects of insurance for both customers as well as insurance agents. Digitizing this entire process can be a win for both parties. Integrated APIs can allow an insurance agent to send out policy documents, receive e-signed documents quickly and shorten sales cycles. Even for claims processing, connected databases can verify information quickly, reduce error rates and quicken claims payments.
Improved customer engagement with integrated CRM: CRM email integration can go a long way in getting agents to connect with customers through channels that are impactful and quick. An effective CRM insurance software has the potential to reduce agent time spent on unproductive tasks by 75%. Not just that, instant access to all customer engagements on a single dashboard can also enhance the overall customer experience and improve customer engagement.
Enhanced risk management in insurance: Risk management in insurance is a core requirement. From evaluating customer risk to managing regulatory risk, insurers need to have a well-thought-out risk management strategy. Real-time evaluation of risk via telematics solutions like satellite imagery for P&C insurers or wearable devices for automobile insurers can improve risk management as well as pricing.
Increase in partner ecosystems across industries: APIs can also encourage partnerships among insurers and other businesses. This is a great way for insurance companies to generate new leads and grow their revenue streams. Without open API networks, such integrations would have required a lot of workarounds. Now it’s more of no business is an island, we have data that you can use and vice versa.
Adoption of open APIs
Open platforms are essential for creating an effective open API ecosystem. Insurers need to consider key elements such as:
In a nutshell, open insurance facilitated via a free API ecosystem is poised to push insurance beyond traditional models. It can transform digital journeys, foster collaborations, improve risk management and insurance, and generate innovative revenue streams.
Looking to leverage open ecosystems and microservices architecture in insurance? Artivatic Solutions are here to give you whatever you need. Our multi-line insurance platform is flexible, scalable, and built for the new insurance era. Write to firstname.lastname@example.org