Insurance-as-a-Service: How APIs Are Transforming The Insurance Industry

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🧑‍💻 Rubén Sánchez
📆 September 6th, 2022

“If opportunity doesn’t knock, build a door.” ~ Milton Berle

In recent years, the insurance sector has been under pressure to become more customer-centric and technologically innovative. A key part of this has been the development and adoption of Insurance APIs, which allow third-party developers to build applications and services that work with data from the insurance company. In this article, we'll take a look at how Insurance APIs are transforming the insurance industry.

Creating new opportunities

The insurance industry has been notoriously slow to adopt new technologies, but that might be changing. The more innovative insurance companies are now offering APIs (Application Programming Interfaces) to allow third-party developers and companies to access data and build applications on top of their platforms.

This is a big shift for an industry that has traditionally been very closed off. By opening up their APIs, insurers are hoping to tap into a wider ecosystem of developers and create new opportunities for innovation, and partnerships.

There are a few different ways that insurers are using APIs. Some are offering APIs as a way to offer data to third-party developers. Others are using APIs to power digital products and services that they offer directly to consumers. And some are doing both.

Offering data platforms is a way for insurers to monetize their core products and services. By giving developers access to data, they can create new products and services that can be sold back to consumers. This could include things like price comparison tools, personal finance advice, or even new insurance products.

Insurers are also using APIs to power digital products and services that they offer directly to consumers. This could include things like chatbots or digital assistants that help customers manage their policies

Traditional operations vs API transactions

In the world of insurance, there has always been a clear distinction between traditional transactions and APIs. Common insurance operations are things like policy renewals, claim submissions, and payments. These are the bread-and-butter of the insurance industry, and they have always been done through manual processes.

API transactions, on the other hand, are a relatively new phenomenon. They allow for the automatic exchange of data between different systems, and they hold the promise of making the insurance industry faster, more efficient, and more effective.

So far, API adoption in the insurance industry has been slow. This is partly due to the fact that insurers are risk-averse by nature, and they are hesitant to embrace new technologies that could disrupt their business model. But it is also due to the fact that most insurers have legacy systems that are not easily compatible with modern API standards.

That said, there are a few insurers who have been early adopters of APIs, and who have seen significant benefits as a result. These insurers have been able to streamline their operations, reduce costs, and improve customer satisfaction. It is only a matter of time before more and more insurers follow suit.

Identifying good APIs

When it comes to APIs, there are a lot of options out there. So how do you know which ones are good and which ones aren’t?

Here are a few things to look for when evaluating APIs:

  1. Ease of use. A good API should be easy to use and understand. It should have clear and concise documentation that is easy to follow. Reading the docs you must have a clear vision of the intent of each endpoint or service.
  2. Functionality. A good API should offer all the features you need for your project. It should also be flexible and allow for customizations.
  3. Reliability. A good API should be reliable and offer uptime guarantees. It should also have a robust security system in place to protect your data.
  4. Support. A good API should come with excellent support in case you run into any issues. The provider should be responsive and helpful in resolving any problems you may have.

Customer-centric APIs

When it comes to insurance policies, customers could feel like they're in the dark. Many people don't understand their policies. That's where Open APIs come in. Open APIs can help make insurance policies more transparent, so it makes it easier to understand what they're paying for and why.

Open APIs for insurance companies means that policyholders can have access to their data and information. This way, they can view their account details, check their policy status, and even file and track claims.

Having an Open API also allows third-party developers to create applications that work with the insurer’s data. This could include apps for filing claims or tracking payments.

Claims

If you are an insurance company, then you know that the claims process is critical to your business. It's also a complex process that involves many different stakeholders. That's why having a claims API can be very helpful.

A claims API can help streamline the claims process by providing a single interface for all stakeholders. This can make it easier to track and manage claims, as well as reduce the overall time it takes to resolve a claim.

In addition, a claims API can also provide valuable data that can be used to improve the claims process. By tracking how claims are handled, you can identify areas where the process can be improved. This data can also be used to assess the impact of changes to the claims process, such as new regulations or policies.

If you're looking to improve the efficiency of your claims process, an API for it can also help to automate several steps of a claim. There are companies that fully automated their claims process through AI.

A practical example: Pay As You Drive

Today, insurance companies are looking for ways to better understand their customers and tailor their products to fit their needs. To do this, they are increasingly turning to data and analytics.

One way that insurers are gathering data is through the use of pay-as-you-drive (PAYD) insurance programs. These programs charge customers based on how much they drive, rather than a fixed rate. This usage-based pricing model gives insurers a better understanding of each driver’s risk profile and allows them to offer more customized rates.

In order to participate in a PAYD program, customers must install a telematics device in their vehicle. This device tracks data such as mileage, driving habits, and location. The data is then transmitted to the insurer, who uses it to calculate the customer’s premium.

While PAYD programs offer many benefits to both insurers and customers, there are some challenges that need to be addressed. One challenge is that not all customers are willing to install a telematics device in their vehicle. Another challenge is that some insurers have been slow to adopt this pricing model.

Don’t miss the train

Open API insurance policies are becoming increasingly popular as they offer a number of benefits for both the insurer and the insured.

For insurers, Open API policies offer a way to reach new customers and markets. They also provide a way to collect data about customer behavior and preferences. This data can be used to improve the insurer’s products and services.

For customers, Open API policies offer more choice and flexibility. They also provide clarity on the coverage and terms of the policy. And, they enable the customer to receive a more customized product thanks to the ability to share data with third-party apps and services, enabling them to find the best fit.

Rubén Sánchez

Founding member of The Crafters Lab

Rubén is a software developer and founding member of The Crafters Lab.

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