APIs facilitate a digitally-integrated insurance ecosystem

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Insurers are now adopting APIs to enhance digital capabilities and provide a better customer experience. Rapid technology advancements and the spike in the number of connected devices are spurring API adoption even further.

The API concept began in the 1960s and today businesses across industries are quickly adopting the interfaces as a gateway to efficiency

Application programming interfaces, or APIs, are a set of communication protocols and tools that make it easier to build web applications by leveraging data from a variety of sources. Whether shared internally between teams or externally with other developers, APIs enable a firm to share assets such as data points, pieces of code, software, or services that it owns and sees value in sharing.

The API concept began in the 1960s and today businesses across industries are quickly adopting the interfaces as a gateway to efficiency. In fact, the API Directory maintained by ProgrammableWeb surpassed 17,000 APIs in early 2017, with more than 2,000 new APIs added in 2016 alone.[1]

Insurers are now adopting APIs to enhance digital capabilities and provide a better customer experience. Rapid technology advancements and the spike in the number of connected devices are spurring API adoption even further.

Moving to an open API ecosystem

As insurers increasingly give third-party developers access to their APIs, the transition to an open API insurance ecosystem is clear. It not surprising that more than half of insurers surveyed for the World Insurance Report 2017 said open APIs have a substantial impact on scalability, new revenue stream generation, and cost efficiency.

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Open APIs help insurers encourage firmwide innovation by enabling third-party developers to build novel applications quickly. Customers benefit, too, because they can now choose a best-fit application from a wide selection thanks to third-party development expertise.

APIs support seamless customer experience

Insurers are improving customer engagement by leveraging APIs to integrate data from various sources to provide more meaningful and personalized offerings, according to Capgemini’s Top-10 Trends in Property & Casualty Insurance 2018.

For instance, Allstate’s GoodHome service pulls data from nine APIs – including Google Maps, Onboard Informatics, Weather Underground, Berkeley Lab Home Energy Saver and Allstate’s Common & Costly Claims – to give customers personalized information and relevant resources that can help them learn how to maintain and protect their homes and lives.[2]

Similarly, in hurricane-prone Florida a mobile app from Security First Insurance leverages map and weather APIs to help customers prepare for storm season and track hurricanes on a custom map. They can also manage their insurance policy, make a payment, or file a claim.[3]

Nationwide leverages APIs in its usage-based SmartRide auto insurance program to track driver behavior via an onboard diagnostic device and provide users with personalized driving feedback. Users earn an instant 10% discount when they sign up and the safer they drive, the higher the deductions they could receive – up to 40%.[4]

InsurTechs count on APIs to develop products that pull all customer touchpoints together by enabling seamless integration and secure data transfer between various ecosystem players.

For example, Los Angeles-based startup Matic leverages APIs to integrate home insurance into the lending process seamlessly. Using loan application information from the home buyer, the InsurTech aggregates relevant insurance quotes and sends them to the user, which saves the home buyer from browsing numerous websites.[5]

New York-based CoverWallet is an early-stage InsurTech that streamlines the process of setting up commercial insurance for a small business. Developers and businesses use CoverWallet APIs to integrate insurance services into their apps and websites easily.[6] By partnering with CoverWallet insurers can offer their products to an expanded potential customer base through new, additional channels.

Using APIs to sell insurance services through complementary partner websites allows insurers to gain access to new channels of revenue and facilitate top-line growth.

APIs power a digitally integrated ecosystem

Insurers realize the importance of digital agility and are taking steps to move toward a digitally-integrated ecosystem.

More than 72% of insurers surveyed as part of the World Insurance Report 2018 said a digitally-integrated ecosystem improved the ability to reach customers in their preferred manner and answer service requests faster.

APIs facilitate seamless integration among a broad range of ecosystem players. As an orchestrated customer experience grows more important throughout the years ahead, APIs will become even more crucial as insurers march ahead toward a seamlessly integrated ecosystem.

To learn more about how APIs will impact the insurance ecosystem, connect with me on social media here.

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