APIs Help Insurance Carrier’s Digital Transformation

By Katherine Jones
Communications Manager, Coterie

APIs, or Application Programming Interfaces, are an important part of many insurance carriers’ digital transformations. Insurance carriers use APIs to connect two pieces of software together, sharing information between companies, platforms, or tools.

For example, when someone buys plane tickets online, the travel service may connect to another piece of software using an “API call” to present prices, flight times, and other data based on the information shared between different software applications.

Despite the complexity behind sharing information between multiple pieces of software, the experience is seamless and unnoticed by the end-user. In just a few clicks, data is analyzed and options generated to present the end-user with relevant choices.

In the insurance industry, APIs offer much of the same benefit. By properly implementing effective API solutions, insurance carriers may encourage growth, increase revenue, and expand into market segments that were previously considered difficult to reach.

As a result, insurers may digitize and modernize easier and in a more cost-effective manner without shifting away from what they do best.

How insurance carriers use APIs

Insurance carriers most often used APIs for purposes of:

• Data aggregation
• Workflow
• E-commerce
• Quoting

According to Tim Metzner, co-founder and CSO of Coterie Insurance, “APIs have the ability to open up the insurance world to begin creating great customer experiences that are on par with other industries, [and] reduce premium leakage by having more accurate and timely information.”

For example, consider this situation:

1. A potential customer inputs information about their business into a form
2. An API call is made to analyze if the lead is in appetite and if so, present the lead with potential product offerings
3. The lead selects a product offering and moves further into the sales funnel
4. An API requests more information then provides a customized quote to the lead
5. An API generates and sends the lead’s information to an agent, who may follow up if the lead fails to complete the purchase or to provide a personal touch following the purchase
6. Upon purchasing a policy, an API processes the customer’s payment details through a third-party payment processor without requiring the customer to go off-site
7. Another API generates and presents the customer with policy documents, a certificate of insurance, and other information

Such a process enables a lead to easily and seamlessly consider multiple product offerings (which are custom-tailored to their needs), purchase and pay for the desired policy, and access policy documents all in a streamlined process and without leaving a carrier’s website.

APIs help insurance carriers adopt tech innovations

Insurance carriers may easily modernize their systems by using available APIs. At the same time, carriers are spared the time and monetary costs of building and developing such infrastructure.

Instead, insurance carriers may partner with insurtechs like Talage, analytics firms, and third-party developers to find and employ the APIs needed to meet the carrier’s needs.

Taking advantage of APIs helps insurers maximize their transformation to a more digital and modular insurance platform. This transformation improves flexibility by creating a means through which innovative APIs can be easily adopted to offer new products or services without introducing significant backend development or maintenance overhead.

Without the use of an API, how would a traditional insurance carrier partner with a freelancing platform to offer policies to the platform’s users?

In all likelihood, the freelancing platform would need an external link or embedded form to direct potential leads to the insurer. This results in a user experience that allows prospective customers to turn away or otherwise decide against purchasing a policy. The process isn’t seamless and there may be too many hoops for a lead to jump through.

However, by adopting relevant API offerings, an insurance carrier, and freelance platform may seamlessly include an insurance quote as part of a freelancer’s sign-up process. It may even be presented as a “perk” for using the platform, all without drawing the freelancer — and potential policyholder — off of the website.

Additionally, much of the user’s information is input when signing up on the platform. An API may pull this information to immediately assess whether a customer is in appetite and, if so, present relevant insurance products for the user to consider purchasing.

APIs allow for more efficient use of data

The digital age has led to an increase in data not previously available to insurance carriers. Information about a customer’s financial status, social habits, claims history and more strengthens insurers’ risk assessments. This wealth of data also allows insurance carriers to better determine if a lead fits the company’s appetite.

At the same time, it’s a substantial amount of data to collect, quantify, and analyze. Performing a more in-depth risk assessment is all well and good, but may take much more time than more traditional methods.

Fortunately, APIs may be used to efficiently collect, collate, and analyze vast heaps of data on behalf of an insurance carrier. APIs may allow carriers to integrate multiple streams of data that weren’t previously compatible, providing insurers with a more holistic view of a customer’s situation.

“In addition to enabling data capture from partners, [APIs] actually enable the ability to leverage third-party sources of data,” says Metzner. Because APIs make use of the cloud for data retention, information is easily accessed and integrated into multiple differing systems.

Access to such data may also be granted to third parties on an as-needed basis.

For example, an insurance carrier may partner with a firm that provides customer service. When a customer makes a claim or has questions about a policy, API calls may be made to provide support staff with access to the carrier’s information, speeding up resolution times.

From there, customer service may update the customer’s information — through an API — to record information about the claim. Other systems, integrations, or departments may then use that information to make future assessments and decisions, all through the use of relevant APIs.

Insurance carriers can provide additional products and services

One of the key advantages for insurance carriers to implement APIs is broader access to products and services not otherwise available or part of a traditional product offering.

APIs are commonly used to power insurance comparison tools, which use inputted data to compare quotes from multiple carriers. However, APIs may also be used in much more intricate, useful, and profitable ways.

Through partnerships with insurtechs and other firms, insurance carriers may take advantage of their APIs to offer additional products beyond insurance only. Doing so helps insurers offer Insurance as a Service or white-label insurance.

Partnerships employing APIs allow insurers to bundle insurance with dissimilar products. Examples include:

• Gig workers signing up for freelance platforms and electing to purchase liability coverage
• Workers’ Compensation quotes for businesses purchasing payroll software subscriptions
• Cybersecurity insurance offers when a business registers a domain or purchases web hosting

Because a customer is providing much of the same information required for an insurance policy at the time they purchase another product, APIs make it simple and easy to present them with a quote for a relevant insurance product.

APIs also allow carriers and partners to structure incentives in the form of discounts and savings. A partner may opt to offer a discounted subscription if a customer takes out a policy. In other cases, customers may receive discounted premiums for mitigating risky behaviors or reducing the likelihood of filing a claim by pairing a policy with a consumer app or smart device.

APIs allow for custom-tailored product offerings

Tapping into new sources of data generated from interconnected APIs allows insurers to offer custom-tailored solutions to their customers. Personalized insurance policies allow for:

• Simplified customer interactions
• Deeper understanding of a carrier’s customers
• Better overall service

Carriers can use APIs to suggest relevant insurance products to customers interacting with partner services. Agents and brokers may also rely on APIs to personalize and optimize their advice.

“Because of the ability to get more rich data directly from an API (instead of a longer application), it allows them to take better advantage of technology to offer more custom solutions without adding a bunch of time and complexity (which is especially key in the small commercial space),” says Metzner.

For example, an insurer may partner with a service offering continuing education to accountants. When an accountant uses the service to fulfill CE requirements, an API call may match relevant and tailored insurance products to the accountant — complete with a quote — without requiring a lengthy application or pulling the accountant off-site.

The result is a streamlined process that offers products specific to a lead’s situation. And because all the required information is easily accessible through the cloud and APIs, carriers are empowered to provide comprehensive advice, guidance, and support at every stage.

APIs enable insurance carriers to meet the needs of underserved markets

Before the insurance industry’s embrace of digitalization, certain businesses and customers fell by the wayside and didn’t quite fit into many carriers’ appetites. They may have been considered too risky or too unprofitable to insure, leaving a segment of the market — however small — underserved.

For example, micro-small businesses — which make up 55 percent of small businesses — have often been underserved by insurance carriers. APIs, however, assist carriers with “[taking] the friction out of the transaction,” especially when integrated with partners already servicing the underserved market.

APIs have “absolutely created more options for underserved markets by enabling new sources of distribution and better enabling agents and brokers to profitably serve these markets,” says Metzner.

In other words, many of the downsides of marketing and selling to unappealing segments are mitigated by APIs. And because APIs are so easy to integrate, insurance carriers may more easily — and cost-effectively — market to underserved businesses through previously unavailable or unused distribution channels.

Underserved markets may now be served by APIs facilitating versatile offerings, such as:

• Short-term insurance
• Usage-based insurance
• Policies covering a single object or risk (such as high-value items or high-risk activities)
• Dynamic premiums based on customer behaviors and analytics

At the same time, APIs allow underserved customers to interact with carriers in new and streamlined ways.

Claims may be filed through a smartphone app that uses APIs to immediately provide data to claims agents, eliminating the need for time-consuming back-and-forths, telephone tag, or in-person meetings.

APIs may also sync with a carrier’s partner to provide enhanced service, assisting a busy and frustrated business owner with finding an approved repair facility or replacement equipment.

By adopting APIs, insurance carriers may open distribution channels to previously underserved markets, increasing revenues without significant upfront or long-term costs.

APIs are important for transitioning insurance carriers into the digital age

The insurance industry often moves at a glacial pace in terms of embracing new technologies. However, as insurance customers begin to expect the same level of convenience and simplicity from insurers as they do other companies, insurance carriers are wise to adopt technologies that allow for modernization.

“The landscape is rapidly evolving and failing to adopt new technologies and capabilities will absolutely catch up,” muses Metzner. “The ability to stay nimble, test, and adopt new innovations will be a differentiator.”

Through partnerships with insurtechs like Coterie, insurance carriers may take advantage of APIs to seamlessly integrate their products into channels where their target markets may be found. And through innovations such as Coterie’s Quote Snapshot, it’s easier than ever for carriers and agents to sell to and service their customers.

As a result, APIs support insurance carriers by empowering their teams with the tools necessary to provide customers with simple, streamlined, and personalized service at every step of the way.

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