What Is an API and What Does it Mean for Commercial Insurance?

As the insurance industry becomes increasingly digital, it’s important for agents to understand how technology can help their businesses. One of the more significant yet unheralded areas of technology is APIs (Application Programming Interfaces). However, this should not be confused with another type of API — a professional certification that stands for Associate in Personal Insurance. 

The technology-version of insurance APIs work behind the scenes to connect services together. This allows them to communicate, such as to display quotes from multiple providers onto a third-party platform.

“APIs are the little pieces of code that make it possible for digital devices, software applications, and data servers to talk with each other, and they’re the essential backbone of so many services we now rely on.”

Postman

Since technology can be complicated, let’s compare APIs for insurance to how a customer would get food at a restaurant.

“The kitchen is the part of the “system” that will prepare your order. What is missing is the critical link to communicate your order to the kitchen and deliver your food back to your table. That’s where the waiter or API comes in,” says MuleSoft, a platform that can be used to create APIs, among other uses.

APIs for insurance agents can be the “waiters” that connect internal systems, allow carriers to share information with third-party agents, help agents pull in marketing tools to their website, and more. But you don’t have to be a tech expert to use APIs for insurance. Many software tools automatically integrate APIs so the end-user doesn’t have to do anything other than choosing what information they want to pull in through the API.

Want to see how using an API can help you grow your insurance business? Click the button below to learn more. 

In this guide, we’ll dive more into what APIs are and what APIs mean for insurance agents so that you can get started using them. 

Inefficiencies in Current Quoting Process

The one thing the insurance industry dislikes is change. But, given the technological advancements across nearly all industries, the same old way of doing things has suddenly become inefficient and slow, albeit comfortable for all parties.

Even today, most agents typically retrieve quotes the old-fashioned way – by reaching out to carriers individually, either by telephone, fax, or other means, to request quotes. This is inefficient for both agents and carriers. Agents waste huge amounts of time requesting, waiting for, and retrieving quotes from carriers. And carriers, on the other hand, must respond to and process these requests individually. 

When time is money, and mitigating risk is your business, it’s no wonder carriers have turned to alternative solutions that have worked well for other financial institutions. Many major insurance companies have invested heavily in creating APIs. However, it quickly became apparent they had a problem. With so many agents writing premium, how were they going to manage all of those connections and integrations? Not to mention the task of getting agents on board with the new technology. 

How Is An API Used for Insurance?

This is where insurtech has stepped in to fill that gap. A number of solutions have popped up over the years attempting to solve this issue. Solutions include scraping a website and creating third party applications that connect agents to carriers via APIs. 

“Web scraping is the process of using bots to extract content and data from a website. Unlike screen scraping, which only copies pixels displayed onscreen, web scraping extracts underlying HTML code and, with it, data stored in a database. The scraper can then replicate entire website content elsewhere,” says cybersecurity company, Imperva.  

APIs on the other hand, allow two applications or web programs to communicate, as mentioned above. As the API ecosystem for insurance and other sectors grows, so too do the use cases. Essentially anytime an insurance agent or company wants to pull information from one system to another, APIs could potentially be used.

That said, some uses for insurance APIs are more popular than others. Research company CB Insights analyzed information from ProgrammableWeb, an API news site, and found that insurance APIs tend to most commonly fall among four categories:

• Data aggregation
• Workflow
• E-commerce 
• Quoting

These categories overlap, with multiple APIs used in conjunction. For example, APIs for insurance might be used to enable online purchasing of a policy as follows:

1. A data aggregation API pulls in information from a research company to an insurance agent’s targeted landing page. The API might be used to display business metrics like small business growth to help show business owners why they may want to protect their company from unexpected risks that could stand in the way of their growth.
2. A workflow API could be used to automatically send an email to an insurance agent, notifying them when someone fills out a form on their website.
3. An e-commerce API could be used to integrate credit card processing capabilities onto an agent’s policy checkout page, rather than sending the customer to another website.
4. A quoting API, such as through Wheelhouse, could be used to display policy quotes from different insurance carriers in one location. 

Who Uses An API for Insurance?

APIs for insurance can be used by anyone ranging from the most tech-savvy coders to marketing professionals trying to generate more insurance leads. Because they have so many use cases, Insurance APIs can be created and/or leveraged by different types of companies within the industry, such as: 

Carriers:

Insurance carriers might use an API to allow third-party agents to easily obtain policy quotes. Rather than a carrier having to process manual requests for quotes, insurance APIs can be used to automatically display quotes and allow customers to commit to purchases while on other sites (e.g., Wheelhouse by Talage).

Agents:

Insurance agents can use APIs in multiple ways, including using chatbots and cloud storage for client records. An insurance agent can also use APIs to help grow their insurance business by using social media APIs to pull in multiple pieces of marketing data into one easy-to-manage location.

As SproutSocial, a social media marketing platform that uses APIs, explains, “Before, you would log into Facebook and Twitter separately, check messages, run search terms and respond when you were tagged. Now, thanks to the networks’ APIs, you can see it all in one view, cutting out on extra time.”

Insurance Partners: 

In addition to third-party companies like SproutSocial that can be used for marketing, APIs can also be used by various InsurTech firms and other partners that support the insurance industry, such as for customer management, data analytics, etc. 

Joris Lochy, product manager at Monizze and co-founder at Capilever, explains in an article for Finextra that with so many new areas of technology emerging, it’s “almost impossible for an insurance company to invest (and be at the top) in every new technology. Partnering with specialist companies (integrated through an open API architecture) is therefore almost a necessity to stay ahead of all those technological evolutions.”

How Is An Insurance API Implemented?

With the many different uses and users of insurance APIs, they can also be implemented in multiple ways.

As Nordic APIs explains, there are three main categories of APIs:

• Public: Available for anyone to use
• Partner: Provided only to select partners
• Private: Developed for internal use

Public APIs

Public APIs can often be implemented by clicking a button to indicate which ones you’d like to use. For those looking to build more advanced applications with public APIs, some companies and data providers offer source information so that developers can then customize what information is displayed and how. 

Partner APIs

Partner APIs can be implemented similarly to public APIs, but you may not be able to find them as easily. If you’re looking for a particular type of API or a custom application, you may be able to have a partner implement an API for your insurance agency. Or even better, manage the API relationship, and you simply pay a service fee to use that tool.

Private APIs

Lastly, private APIs might be implemented by your internal IT team. For example, to help you manage customer data more efficiently.

For those new to this technology, starting with partner APIs is usually the way to go. Using tools like Wheelhouse can help you implement APIs without doing any heavy lifting. The platform’s integrations allow insurance agents to connect directly to the underwriting systems of top-rated carriers. This makes it easy to provide bindable quotes to their clients quickly and efficiently. Agents can also increase their digital distribution and grow their business by sharing the application across their marketing channels. It’s much more efficient and cost-effective than trying to build an API and connect individually to each carrier.

Carriers who’ve already built their APIs or are planning to build one are gravitating towards companies they can partner with. It’s a win-win-win for everyone involved. Carriers need only manage one integration. And agents get direct access to carriers, and the partners create a cohesive environment that enables a steadfast industry to adapt more easily. 

Ultimately, APIs for insurance can make selling insurance easier. This allows carriers to see a maximum ROI for their investment, and agents can automatically pull in information from multiple sources instantly, saving time, money and creating a smoother, better, and tighter client-agent relationship.