What are APIs?
An API is an “application programming interface.” API technology is essentially a connector. It acts as like tunnel, pulling data and information from one place to be used in another. Just about all industries rely on different types of technology to streamline processes and improve customer experiences. APIs have become an integral part of how various technological devices share information. The primary benefits of API technology are speed, accuracy, efficiency and cost, all critical to productive insurance operations in the modern era.
APIs in Insurance
In 2023, it is essential for insurers to have access to information in milliseconds. This information can be accessed and used from internal systems like policy administration (PAS) and rate tables or imported via external databases like LexisNexis, satellite imaging services, motor vehicle departments, medical records, etc. The good news is that more robust data ecosystems can now provide more data than ever. This wasn’t the case just 10 years ago.
Now, with the combination of sophisticated API capabilities and more access to usable data, APIs are enabling consumers, agents, underwriters and external parties to securely, accurately, and instantly access and share information with one another. And since the information collected by APIs can be automatically integrated into the insurer’s agent and customer journey, companies can simply choose the information they want to access and bring it seamlessly into the sales, underwriting and policy issue and claims processes, among others.
For specialty and commercial insurers who are in vertical markets such as travel, real estate, shipping and cyber, this means instant access to data in areas such as flood plain, fire risk, tornado risk, hurricane data and information breach histories. The advantages of having access to valuable data in milliseconds? Let’s take a closer look.
The Impact of APIs on Insurers
Key benefits of API integration for insurers include:
- The ability to pre-fill applications to reduce time to quote and increase data accuracy
- An enhanced and expedited underwriting process through providing underwriters novel data sets
- The low-touch application processing and underwriting for a significant segment of new business means insurers and MGAs can enter new, profitable markets, especially for small/middle market business (SME)
- The right technology infrastructure to enables insurers/MGAs to plug into or construct new ecosystems, while managing the security risks associated with open data exchange (open architecture)
- Insurers and MGAs can engage a technical partner to ensure that the APIs are properly integrated, secure and performing to meet the need of the company/broker/customer
Takeaways
- An API strategy is not just an IT initiative, it should speed up underwriting and time to quote
- It is a larger value proposition that leads to a competitive advantage
- APIs are fundamental parts of an insurer’s digital asset library
- Organizations should define their API strategy around desired business capabilities, including underwriting
- Underwriting API connectivity and portals are valuable tools to keep insurers organized and connected with brokers and customers
- Arming underwriters and actuaries with such data will enable both improved risk selection and more nuanced product design
- In this environment, underwriting leaders are repositioned as high-profile strategic influencers and informed decision makers
- Bringing on a skilled technical partner and advisor can speed the integration of APIs and keep launch costs low vs internal coordination
To see a full list of DRC’s available APIs, visit APIs – DRC (decisionresearch.com).
