Insurtech Ecosystems and the API Benefit

Insurtech ecosystems, principally powered by the flexibility, sophistication and increasing ubiquity of APIs, allow for more simplified exchange of information coordinated among multiple organizations.

October 13, 2020

Insurtech ecosystems, principally powered by the flexibility, sophistication and increasing ubiquity of APIs, allow for more simplified exchange of information coordinated among multiple organizations. The business benefit of this orchestration is clear — faster time to market for new products and services combined with more efficient solutions to operational problems, all crystallizing as a source of differentiation for the group of businesses.

Many insurtech companies have a specific product focus, for example a communication platform for insureds and their carrier, but they still need to partner with other service providers to fully complement their offering for claims, billing or other more routine insurance functions, across different geographies and business units.

APIs support these connections, helping enrich the insurtech ecosystem and bringing value to all organizations involved.

Collaborate, Don’t Compete
With the advent of APIs the opportunity for disparate organizations of different sizes and lineages to collaborate, rather than compete has never been easier.
Groups of organizations working together through APIs have a distinct competitive advantage, given the rapidity with which they can roll out new products and services, discover savings opportunities and more quickly pivot according to changing market conditions.

Ecosystems for Operations, Not Just Product
It’s important to note that these collaborations don’t always center around a product offering, but can often benefit back-office operations, as well, reducing the potential for conflict of interest or cannibalization between any given set of companies. For example, an insurtech may have developed an innovative auto insurance solution that employs IoT sensors in vehicles to score drivers on safe driving, the data from which can be fed to carriers to inform pricing options or penalize risk-taking drivers. The insurtech company, however, will need other insurance-related operations capabilities to offer a fully-realized solution to potential carrier clients, which is where back-office API support ecosystems can provide value.

Support for Single-Focus Insurtechs
Most insurtechs have identified a market niche and are working towards building a business around it. This could be a marketing channel, AI algorithm, fraud detection system, texting platform for customer service, etc. Regardless, most insurtechs will still require an additional core system to manage the regular, more mechanical aspects of delivering insurance to customers.

Insurtech organizations can benefit from building ecosystems with API service providers to handle all those other operational parts of insurance. DRC, for example, has an API library for these insurtechs to call, with capabilities for claims, billing, analytics and other functions. Flexible, comprehensive API libraries help insurtechs take the next step forward in their market advance.

No vendor can be everything to everyone — for one deployment a carrier may have dozens of interfaces — so APIs step in to make what would otherwise be a multiyear, highly-expensive process a faster, far less expensive and more efficient coordination among multiple players.

The Geography + Business Unit Challenge
Integrations are a challenge. Different technologies built around different types of data, languages used and of course the ever-present variable of different human beings complicate the scramble to come together to make integrations work. But Insurtech ecosystems built around APIs can obviate many of these challenges.

An additional complicating factor is the reality of the needs of different business units across multiple geographies. A carrier’s Asian operations, for example, may focus more on AI and machine-learning for a consumer unit, while the European hub may need support with digital transformation of legacy manual workarounds.

The flexibility of APIs to support insurtech ecosystems embraces these differences, as opposed to chafing against them.

Key Takeaways

  • Ecosystems of insurance-related organizations, collaborating together and connected digitally are at a competitive advantage compared to stand-alone peers.
  • API ecosystems should not just be relegated to product development, but also to support back-office operations functions for insurers.
  • Many insurtechs have developed a niche product that serves an important, but limited function, and API ecosystems offer the additional components necessary to fully build out an offering.
  • Carriers are complicated by geography, business unit, technology, language and human factors, and APIs lend support to easily surmount these challenges.