Could Your Tech Stack Use a Spring Cleaning? How to Reduce Insurance IT Complexity with APIs

Today’s insurance agencies rely on an average of 5.7 to 11.9 different technology platforms for day-to-day operations, depending on their total revenue. For large-scale carriers managing multiple agencies and their downstream producers, it’s likely that number is even higher. While this level of digital innovation represents a positive change in the insurance industry’s ability to offer modern experiences to its consumers and efficient workflows to its employees, cultivating a more robust tech stack doesn’t come without challenges. 

Each time an insurance organization invests in a new digital solution, it’s creating greater efficiencies for at least one piece of the insurance distribution puzzle. When a business starts out, it may only have the resources to purchase the most essential technology, like an email application and a bookkeeping software. As the business grows, it invests in more technology to help manage the increase in clients and employees — an HR system, a customer relationship management (CRM) system, a compliance management solution, and so on. 

While these systems no doubt create greater efficiencies for the business, there’s no denying the irony that the more complex your tech stack gets, the more inefficient it can become. In fact, it’s not uncommon that, as carriers and agencies purchase more systems, they discover some big problems. 

How does a complex tech stack impact your insurance business?

Poor integration capabilities lead to fragmented systems

The more systems you add to your tech stack, the more important it is for those technologies to communicate with one another. But with as much as 74 percent of insurance companies still relying on legacy technology for their core business functions, seamlessly linking existing systems to new ones so that they function together in a meaningful way isn’t exactly the norm. Older systems use different data formats, protocols, and structures than modern solutions. These differences can cause significant compatibility issues that make integrations more complex and ultimately lead to system fragmentation. 

Silos limit smart, data-driven business decisions 

Your distribution channel is filled with data on every downstream partner you work with. Proactive insurance organizations use this data to intelligently expand, contract, and restructure their distribution channels in response to shifting market opportunities and challenges. As a result, data-driven businesses are 23 times more likely to acquire new customers and 19 times more likely to achieve above-average profitability than their less data-driven counterparts. However, data silos, a common symptom of lackluster integrations between multiple systems, make it difficult to leverage producer data for informed decisions. Silos prevent producer data from flowing seamlessly through your systems, creating multiple versions of truth in your records and making it difficult to decipher where the most accurate information actually lives. 

Scalability issues prevent profitable growth

When it comes to sustainable growth, automated solutions have been a real game-changer for the insurance industry. For example, these days, with the right distribution channel management solution, any carrier onboarding an agency and its multiple downstream producers can validate multiple licenses across multiple lines of authority and multiple states all at the click of a button. Not all that long ago, the same process was only achievable through hours, if not days, of manual work. However, not all automations are created equally and many legacy technologies lack the ability to scale efficiently, making it just as difficult to grow without also increasing overhead costs. 

Disjointed systems increase security and compliance risks 

Complex and ever-changing regulatory requirements form the backbone of the insurance industry (seriously, we have a whole series about it), making compliance increasingly complex to maintain. Staying on top of regulations and avoiding penalties is particularly challenging when you’re dealing with disjointed systems that are unable to update in real-time, creating inconsistencies in your distribution network data. On top of compliance risk, data security is a major concern for businesses with a complex tech infrastructure. In a study examining the state of cybersecurity across the insurance sector, SecurityScorecard found that third-party software and IT vulnerabilities were to blame for half of the data breaches reported by 150 top insurance firms.

Budget predictions reveal a greater focus on reducing IT complexity 

Between the pitfalls of a complex tech stack and the ongoing market volatility and consequent budget tightening of the past few years, it may come as a suprise that experts predict an increase in tech spend across the insurance industry over the next year. But, digging a little deeper into where and how businesses plan to use those funds paints a clearer picture. 

With talks of tech consolidation from big-name players like GEICO, and greater pressure on IT departments to deliver faster ROI, it’s likely we’ll see less prioritization on multi-year, complex technological overhauls and greater investment in lower-lift, modular solutions to help consolidate fragmented infrastructure, reduce vendor management complexities, simplify workflows, and unlock deeper data analytic capabilities.

The focus shift makes even more sense when you consider the fact that many insurance carriers and agencies have already invested decades of time and millions of dollars into their existing systems. When it comes to their IT, these folks aren’t looking to reinvent the wheel so much as they’re looking for supplement solutions that will boost their efficiency with as little business interruption as possible. 

The solution: Investing in APIs to reduce tech complexity and boost operational efficiency

For businesses with existing distribution channel management ecosystems, application programming interfaces (APIs) offer a solution for improving operational efficiency without ripping and replacing current systems. Modernizing large and complex systems, like those used to manage your insurance distribution channels, can take months or years. APIs reduce tech complexity and get the most complete and up-to-date producer data flowing through your systems more quickly and efficiently than ever before. Carriers and agencies that invest in APIs benefit from their:

Improved integration capabilities: APIs integrate directly into an organization’s existing platforms, opening the door for more seamless data exchange between disparate systems and eliminating bottlenecks in daily workflows. 

Seamless, secure scalability: By leveraging APIs that derive data from industry sources of truth, businesses can focus less of their time and resources on data maintenance as their business grows, and more on making the most of the tech infrastructure that drives their core business processes. 

Real-time data: APIs can elevate distribution network data quality by synchronizing an organization’s existing tech (and the data that lives within it) with industry sources of truth. Rather than relying on manual data validation, APIs automatically ensure producer data is always up-to-date and useful. 

By leveraging APIs, insurance carriers and agencies can transform their tech infrastructure from complex, fragmented, and inefficent to agile, connected, and modern. As a result, they’ll avoid spending the time and money needed to complete a total system overhaul and gain greater visibility into their distribution channel data across their existing platforms.    

Let AgentSync’s ProducerSync API meet you where you’re at

If tech complexity is blocking key distribution channel data from flowing through your existing systems, then your data’s not doing you much good. From surfacing key producer data when and where you need it (think before binding a policy or paying out a commission), to highly sophisticated analyses on how to optimize your distribution channel for maximum success, ProducerSync API can be the tech enhancement your business needs at the cost and implementation timeline it wants. 

Contact one of our experts today to find out how your organization could benefit from ProducerSync API.