Insurance application programming interfaces (APIs) allow companies to connect different platforms and services to one another, extending the functionality of offerings.
Digital transformation has been a challenge for the insurance industry; in part due to widespread reliance on outdated, legacy systems. In many cases, legacy applications are so integral to daily processes that modernization would be too disruptive - and expensive - to be practical.
APIs can help insurers add features and functionality without requiring a completely new system, evolving to a more digitized, modernized, customer-centric business model.
Application programming interfaces (APIs) are short scripts that can be used to get two different applications to ‘speak’ to one another.
Because of the way that applications are built using different languages, configurations, and structures, it can be difficult to get two different applications to work together. And if applications do not work together, one of two things can happen. Data may remain siloed, preventing organizations from using information fully and gaining valuable insights from data analytics. Or else data is transferred between programs, usually by using manual, repetitive, resource-intensive, error-prone data entry processes.
APIs work like translators, allowing applications to speak to one another, and work together. An insurance API can connect a discrete application (like a rating application) to a different internal application (like document generation) or a third-party vendor (like DocuSign.)
To support a constantly changing market, many insurers are moving their technology platforms to API-centric microservice-based architectures.
Imagine a P&C insurer wants to incorporate data from IoT devices into rating calculations, for example, a device that measures driver safety could be used to calculate the cost of fleet insurance for a company.
An API would allow the IoT device to send data directly into the insurance platform, where it can be run through the required algorithms to generate an updated cost of insurance.