Leveraging APIs to Accelerate Insurance Industry Transformation
In today’s world, we are seeing broad social and technological shifts that are forcefully driving a push for change with regard to the business model of insurance, as well as the technology landscape that supports it.
New methods of interaction with policyholders, agents and brokers, new coverage options and new distribution channels are emerging every day, which means that insurers looking to stay ahead of the curve need to act – and act quickly. However, this urgency is not just about speed, but also about accuracy. As in all industries, being first and fast brings market share, but being accurate and relevant brings longevity.
Application Programming Interfaces, more commonly known as APIs, are an essential component of any successful digital transformation. When much of the today’s technology was in its infancy, APIs were typically provided by software vendors to expose or share some of their software application capabilities with consumers. Consumers would then leverage those APIs to expand the functionality of their custom applications. It was a linear provider-consumer relationship.
Where Are We Now?
As we fast-forward to today, APIs have become common mechanisms for sharing digital assets between any parties involved in a given insurance transaction (insurer, broker, agents, provider, customer, etc.), creating a symbiotic relationship among stakeholders. Thus, APIs have connected the long-fragmented world of insurance and now act as the standard for exchanging digital assets or values.
APIs help insurance carriers by enabling them to:
- Connect platforms for seamless interaction between legacy systems and modern platforms, to achieve optimal levels of automation as well as reduce data redundancies across applications.
- Obtain pertinent data faster to support a customer’s specific needs and queries quickly.
- Integrate with a plethora of third parties to gain insights that facilitate well-informed risk decisions and reliable risk advisement.
- Improve servicing of policyholders by augmenting traditional robotic process automation (RPA) and optimizing value streams.
- Expose common sets of business capabilities to effectively communicate within business units, as well as with agents, brokers and customers.
- Provide frameworks that simplify interactions between customers, agents, brokers and partners.
- Uncover new ways to distribute products to digital channels, such as aggregators and Insurtechs.
- Explore new commercial models by exposing APIs to partners.
- Compose new value-based solutions, products and capabilities, resulting in expanded revenue streams and competitive advantage.
- Build communities of insurers to share common knowledge and data.
- Satisfy regulatory and compliance demands by supplying the most current and relevant data.
While it is now imperative for insurers to have a digital transformation strategy, it is equally, if not more important, to have an effective API strategy as a prerequisite to any digital initiatives. APIs enable insurers to prepare for changing market conditions, remain relevant with ever-changing Insurtechs, create new business experiences and models, and most importantly, be part of market disruption, rather than a victim to disruption.
To achieve this, insurers must define their API strategy, assess their API maturity, as well as their competition (including some market disrupters), and, finally, create a practical API roadmap based on their organizational capacity and target business capabilities. When doing so, always align APIs to prioritized business capabilities and embrace an API product-mindset.
Only then will insurers be truly ready to digitally transform and take on future obstacles in stride.
Read part two of our blog series on insurance APIs to learn more.