APIs on the Insurance Industry

Insurance Industry Perspective

The APIs are demonstrating to be successful in multiple industries. Any correlation between insurance and other industries has to consider the nature of the consumer and the commercial interactions that exist between them. If we observe the attributes of the actual uses of the market, we can see that prosperous public APIs for frequent contact consumer models in almost monopolistic markets (for example, Twitter, Facebook), public services with attractiveness for the universal consumer (for example, Google, MapQuest) and where governmental regulations lead to conformity. The opportunities of a market in evolution, as in the payments, also has important attributes to these models.

While, at first glance, it might seem like the insurance doesn’t align much with these models, if we analyze closer the interactions between insurers and dealers, business partners, consumers, and regulatory bodies, shines the opportunities for the APIs, and actually, are having success. Looking through this lens, we can see that both public APIs and private one’s proportionate value in four different ways: through central insurance systems, in the development of common insurance services, through government regulatory agencies and through intermediaries.

Maximizing reuse in central systems.

The software providers of the central insurance system can take advantage of APsI as a means to accelerate the implementation deadlines for their clients. APIs maximize common data elements and reuse fuel, reduce effort and increase implementation speed.

These providers have a variety of routes to enable APIs that can simplify integrations and accelerate implementations. For example, suppliers can create APIs in their product development teams, share APIs created by their customers across their entire customer base, and encourage business partners to develop APIs that their customers can use to integrate into their system platforms central.

This strategy has proven to be effective, particularly with regard to common insurance functions (eg address verification, industry-standard transactions, geocoding) that need to be used by each customer. For example, leading policy management provider Duck Creek partnered with Pitney Bowes to develop an API to validate address information and enrich address-related data for the price and issuance of policy management. This simple but effective approach highlights how to maximize reuse and increase data quality is a common goal of both software providers and insurers.


Accelerated Common Services

Common insurance service providers use public and private APIs to provide insurers with access to data that affects their subscription decisions and claims adjudication. Normally, these common insurance services have a significant market share or provide an attractive utility service for the market in general.

For example, RL Polk & Co., a leading provider of marketing information and services for the automotive industry, developed the private VINtelligenceTM API that provides vehicle specifications (e.g. vehicle brand, model, engine detail) for nearly 300 millions of active vehicles in North America. Similarly, Deloitte’s D-rive mobile device-based telematics platform captures, rates and reports driving behaviors while involving drivers through a mobile application and an online portal. Insurers use the D-rive API to gain access to driver data, which can be used to determine an insured’s risk profile or premiums for use-based insurance policies.

Allowing consistency for governments

From a regulatory perspective, several states require verification or communication of insurance data in real-time or almost in real-time. Government entities can take advantage of APIs to simplify their access to insurance information, which generally results in faster and higher quality data at lower costs.

States such as Florida, Oklahoma, and Wyoming require online verification of a driver’s auto insurance coverage to validate mandatory vehicle liability insurance for any automobile registered in the state. To enable these capabilities, the states publish an API for insurance companies to provide this information in real-time. Without these APIs, states would have to capture and retain large amounts of information from each insurer and try to maintain accuracy with a very dynamic data set, an almost impossible task.


The aggregation that drives intermediate APIs

The intermediary market for insurance products continues to expand, and insurers wishing to participate in these markets must align with the public APIs that enable these markets.

This is true for consumer markets, as well as for comparative rating services used by various business partners. Some insurers ensure only specific business lines or within limited states but wish to offer a more comprehensive and unique store for their customers. By developing relationships with other insurers and an API that can add quotes from multiple partners, their agents can complement their own products with offers labeled blank that provide a more comprehensive solution and create greater adherence among their insured.

Players in the intermediary market, such as SelectQuoteiv, a leader in L&A products that serve the final consumer directly, and Insurance Noodle, which provides services to independent agents as part of the P&C industry, use API to aggregate product information from various insurance providers and offer comparative quotes in real-time. Developing an API is only part of the answer, as intermediaries must also have a client base significant enough to convince insurers to participate in their market. For this, longevity matters. EZLynx, a long-time comparative rate provider, has served the intermediary market since 2003 and, as a result of this longevity, now serves more than 19,000 agencies in 48 states. To develop and distribute a truly successful API, scale and breadth are necessary to achieve a critical mass.

A wave of APIs

The insurance sector remains an emerging space with respect to the use of APIs. The insurance ecosystem is increasingly increasing with the application of API to streamline business processes and introduce greater speed, agility, and profitability. Insurers often consume these APIs instead of creating or owning them. As the wave of APIs continues to evolve in the industry, the question is when insurance companies enter a wave of APIs.

The insurance sector remains an emerging space with respect to the use of APIs. The insurance ecosystem is increasingly increasing with the application of API to streamline business processes and introduce greater speed, agility, and profitability. Insurers often consume these APIs instead of creating or owning them. As the wave of APIs continue to evolve in the industry, the question is when will insurance companies enter the game and develop their own standard configuration APIs?


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