APIs are now a familiar tool for insurance companies in their journey of digitization and modernization:
For the insurance industry today, there are various types of APIs that are available, the major ones among them being public APIs for use by any third party without formal approval by the API owner, private APIs developed and used within the organization to share functionality and data between internal systems, and composite APIs that combine 2 or more types of APIs in a single codebase. These APIs serve as intermediaries between multiple applications or between internal systems and the external software developed by technology partners.
Like in the banking sector, APIs used by the insurance companies also facilitate open insurance, which means insurance companies can make their data available to other industry players and non-insurance organizations making use of these APIs. Using open insurance, insurance companies can do price comparison and at the same time create new streams of revenue, like data sharing with business partners, 360-degree customer view with advanced personalization and behavior prediction, accurate risk modelling and underwriting, etc.
4 KEY PURPOSES
Typically, insurance companies use APIs for 4 key purposes:
Data aggregation: These APIs allow insurance companies to pull out relevant information from any research database.
Workflow: These APIs can be used for purposes like notifying an insurance agent about a prospect, who had made queries about a policy.
E-commerce: Such APIs can be used on the checkout page of the insurance company’s website to support credit card payments etc.
Quoting: Insurance aggregator platforms can use such APIs for displaying policy quotes to the customer from various insurers.
EMBEDDED INSURANCE
One significant advantage of using APIs is that third-party companies outside of the insurance industry can make use of data within an insurance company and embed insurance products. These APIs also help the insurance companies in collecting data, integrating chatbots and even making accurate risk predictions. One specific use is the collection of data from IoT devices. Such devices in vehicles, for example, provide an insurance company information when an accident occurs or about the driving pattern of a driver. Similarly data from medical devices and wearables can be used to make risk assessments with regard to life and health insurance policies. Such data collected from IoT devices can help insurance companies to assess risks more accurately and continuously, adjust premiums based on customer behavior and other factors, gain more insight into customer behavior and preferences to make effective personalization and offer new products – for example the new concept of ‘pay-as-you-drive’ car insurance.
APIs can also convert legacy applications into a unified digital ecosystem without incurring huge costs. Thus data can be easily unlocked from silos and made use of for data analytics; data can be an easy tool in decision-making, can provide 360-degree customer views, improve operational efficiency by removing the need to re-enter and re-request data, etc.
SHARING DATA
Insurance APIs can be integrated to streamline access to relevant information for professionals like lawyers. Through data sharing and verification using an API, a lawyer can use the information to determine the client’s insurance coverage to negotiate a fair settlement. Similarly, APIs can allow embedded insurance offerings in auto dealerships, thereby streamlining the process of verifying insurance requirements for the vehicles concerned.
APIs from an insurtech firm can help in customer management and data analytics. Insurance agents can use APIs for collating various marketing data and storing client records. Carriers can use APIs to automatically display quotes to customers while they are browsing aggregator platforms, eliminating the need for manually processing requests for quotes.
Using APIs, an insurance company can:
- Offer customized products based on usage trends and the needs of customers
- Simplify damage assessment and claims processing
- Ensure efficient underwriting by pricing the risk correctly
- Bring in digital transformation by partnering with enterprise platforms
Insurance companies can now embed transactional APIs into their websites, mobile platforms, and other digital channels, thereby enabling them to provide insurance coverage to customers who never even came to the insurer’s site. For example, using telematics, drivers can be assessed about their safe driving and they can be offered discounts in insurance premiums.
In India, Zuno General Insurance, (formerly Edelweiss General Insurance) is one of the leaders in making use of APIs. It has launched a first of its kind, Open API Gateway, to facilitate complete digital collaboration with its business partners. The company’s authorized partners can easily integrate their systems with the company’s robust technology platform, which will help further reinforce EGI’s linkages with both customers and partners.
Shanai Ghosh, ED and CEO of Zuno General Insurance, says: “Our Open API Gateway is aimed to make API consumption easy in a self-assisted manner. It is our endeavour to strengthen digital capabilities of our partners, in a simple and effortless manner. We have provided a robust and comprehensive documentation of APIs, including example code samples, so our partners can get started within a matter of minutes with an easy sign-up process,” she adds.
Forward looking insurance companies will have to undertake API integration in their systems as the digital ecosystem is fast moving towards a large network that is capable of delivering a full suite of best-in-class solutions and services.
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