The Guide to Insurance Industry APIs in 2022

Strengths, weaknesses, opportunities, and threats. You know the drill. But not since the dawn of the internet will something so profoundly impact all four pillars of Albert Humphrey’s SWOT analysis technique – the API.

The sun is setting on proprietary, unconnected data systems. Insurance organizations of all kinds, including brokers, insurers, adjusters, and agents need to be more agile, efficient, and speedy to keep up with the demands of today’s marketplace.

APIs are the solution that will thrust businesses forward to become industry leaders. Companies who are unable to keep up will mercilessly be left behind. Insuretech Connect co-founder Caribou Honig exclaims “this is the decade of integrations”.

What is an API?

So, what exactly is an API? The API acronym stands for application programming interface. The Oxford English Dictionary defines an API as:

A set of functions and procedures allowing the creation of applications that access the features or data of an operating system, application, or other service.

In layman’s terms, APIs pull the exact data needed, when it's needed, and then presents such data in a readily useful way.  

Early on, the insurance industry had CRMs that were able to store and present data that was both easily accessible and usable. However, as the industry has grown, so too has the amount of data stored. This has made it increasingly difficult for different users to aggregate data quickly into a form that is also functional.

As a result, extracting, compiling, and deploying data has become a mostly manual process. APIs solve this problem by doing the work humans currently do. The result – lower operating costs and increased revenues, all without increasing an organization’s headcount. But more on the benefits of APIs in a bit.

The API Revolution

For many businesses, it can be a challenge to quantify how integration technology can improve their bottom line. Learning a little about the history of APIs can be useful in understanding their impact at a macro level. 

Amazon, along with Salesforce and eBay, forever changed how business was done online. At their core, Amazon is a technology company that leverages its engineering prowess to levels unsurpassed in nearly any industry. As the company grows, so too does the overwhelming amount of data collected and stored. 

During the mid-2000’s, Amazon Vice President and CTO Werner Vogels, began observing the company’s productivity levels declining. Amazon’s many services were growing exponentially, and so were their data needs. As a result, engineers were spending an inordinate amount of time simply managing the company’s information technology. The monolith of shared data soon became an obstacle instead of a resource for growth. 

Amazon then began implementing the use of APIs. APIs became the bridge between divisions, vendors, and services. Very quickly, the individual departments within Amazon were able to not only access information quickly, but more importantly, in a format designed to meet the specific data needs of the end user. Speed and agility returned to the growing company. 

Vogel asserted “if we hadn’t experienced the process (API implementation) ourselves, we would have been unable to understand…the value it would have for our customers”. APIs are now essential to scaling the company and have allowed Amazon to remain an industry leader. The same will hold true for the insurance companies who are first to embrace and leverage API technologies.

The State of Insurance APIs

At this point, for all the benefits APIs provide across such a wide spectrum of businesses, why haven’t they taken root within the insurance industry? 

That answer likely lies deep within the relatively stagnant nature insurance organizations have retained throughout the years. Only now are we beginning to see integration and APIs capture the attention of insurance C-suites – even if out of sheer necessity. 

Insurance significantly lags other industries in API utilization. The financial industry, which has embraced API integration, has over 2,000 APIs available. Insurance companies, on the other hand, have access to less than 10% of that amount. It has only been within the past 3 years adoption of APIs has seen a marked increase among insurance organizations.

The slow adoption of APIs in insurance can be tied to the talent crisis plaguing the industry. Younger generations do not find a career in insurance interesting. And for millennials who might have even the slightest curiosity about insurance, 80% of them admit they have a limited understanding of the employment opportunities within the industry.

Then there is the large chunk of the workforce retiring before the end of the decade. Dr. Brenda Wells, a professor at East Carolina University, argues the industry is facing more of a talent “cliff” than just a crisis. But the tide just might be turning. 

Major universities across the country, with the support of insurance industry advocates, have developed robust insurance and risk management programs, exposing thousands of brilliant minds to the business. Couple this with their instant adaptation of anything and everything tech, there is a new breed of insurance professionals ready to meld technology and insurance.

Use Cases For APIs in Insurance

The role APIs and integrations play within the insurance industry will be nothing short of transformative. By providing quick access to services, vendors, companies, brokers, and clients in a safe and efficient way, APIs can accelerate an organization’s forward momentum in one or more ways:

• Speed: Large, cumbersome data systems limit a user’s ability to access information quickly. APIs provide companies the agility and speed necessary to react to an ever-changing marketplace. 
  
  
• Reach: APIs extend the reach of an organization to other businesses, both within the industry and externally. The opportunities are nearly limitless as APIs can leverage relationships to drive new business, access previously unavailable markets, or assist in increasing client retention. 
  
  
• Devices: With a world filled with the Internet of Things (IoT), insurance companies can tap into devices such as smartphones, GPS trackers, sensors, or practically any other device to collect pertinent data to improve everything from claims frequency to customer communications. 

Technology, when properly implemented, delivers businesses lower operating costs and increased revenues – the goalposts of every organization. APIs break the restraints of legacy systems, creating new and relevant user experiences in an abbreviated time frame, not possible just a few short years ago.  

We can examine each of the three ways insurance organizations can leverage APIs with industry use cases. 

Speed- Claims Management

When consumers purchase insurance, what they are really buying is the promise of being made whole in the event of a claim. How well claims are handled is the foundation from which insurance company reputations are built. 

APIs can reduce the friction that occurs between claimants, carriers, and adjusters. All of whom are typically accessing different systems to obtain information. APIs can be integrated between the carrier and a third-party adjusting firm, the claimant and the adjuster, and finally the carrier and the claimant. 

For insurance carriers seeking solutions to their claims handling woes, APIs can offer a fast and complete option for enhancing the customer experience. By increasing customer satisfaction, retention rates will improve as well, ultimately improving profit margins. 

Reach - New Partnerships

Organizations who invest in APIs and integrate with vendors and complementary industries can see opportunities to grow exponentially. 

Within the insurance industry, APIs are being created to connect brokers and carriers like never before. Sharing data is mutually beneficial for both parties. By removing the manual process of entering underwriting data, brokers can solicit quotations from multiple carriers seamlessly and in less time. Carriers, with access to the risk profiles of a broker’s book of business, will have more chances to have their quotes presented in front of prospects. 

Reach can also be extended outside of the insurance industry using APIs. An API connecting insurance agents to area real estate agents is just one example. The real estate agent gains the value-added service of providing insurance premium estimates to potential home buyers. In return, the insurance agent has more chances to write new business.

Devices - Mitigate Risk

One of the greatest services an insurance agent, broker, or company offers is to reduce the frequency and severity of claims before they occur. APIs can connect to practically any device to gather data which in turn, can identify previously hidden exposures. 

In just one scenario, an API would pull data from sensors that detect water, pressure, temperature, and humidity changes occurring inside a building. This information would then be fed to the insurer or agent to aid in producing mitigation strategies to protect the building or its contents which may be susceptible to such changes. 

APIs can also integrate with devices to ensure the safety of an employer’s workforce. This is accomplished with data throughput provided by GPS trackers in vehicles, tension sensors in harnesses, or cloud-based security systems, just to name a few. Patterns identified could reduce automobile accidents, workers' compensation claims, and workplace mishaps.

APIs and Your Future

The future is now when it comes to insurance APIs and integrations. With their capacity to streamline procedures, increase processing speeds, improve accuracy, and open new opportunities, APIs are the engines that will propel the insurance industry forward. Those slow to embrace the value of APIs will miss one of the greatest accelerators of growth the industry has seen since the advent of the world wide web. 

Want to learn more about how Highwing uses APIs to power connected systems, or just curious to learn more about APIs? We would love to connect. Get in touch with us here.