The insurance industry is rapidly catching up to technological trends that other industries have been using for at least several years already. One such new, high-tech functionality is the use of application programming interfaces (APIs).
While that may sound overly technical and out of reach for the average insurance professional, most people are interacting with APIs multiple times each day, even if they don’t know it. Read on to learn more about what APIs are and which ones insurance professionals should be using in 2024.
What is an application programming interface, or API?
An API is, simply put, a connection between two or more separate software, applications, or web services. The API is the intermediary that enables information to flow in one or both directions between programs that perform different functions but benefit from sharing data.
On a technical level, APIs are specific instructions that tell software how to interact with one another. The API contains all the information each application needs to successfully integrate. However, unless you’re going to start doing your own programming, you don’t need to understand how APIs work on a technical level to be able to use them. Just in case you do want to learn more, we’ve covered APIs 101 here.
Examples of APIs in everyday life
To demystify the idea of APIs, you don’t have to look further than your computer or smartphone. If you do any online shopping, then you’re already using APIs constantly.
For example:
- When you choose to “login with Facebook” (or Google, or Apple) instead of creating a new account at the site where you want to shop
- When you choose to “pay with PayPal” instead of entering a credit card number at checkout
- When you get a text alert from your credit card company about a “suspicious charge” that just went through
These are just a few of the nearly endless examples of how APIs power the programs we use constantly. So, how can we use them to our benefit in the insurance industry?
The best ways to use APIs in insurance
The sky’s the limit when it comes to ways the industry can use APIs to speed up processes, remove manual data entry, and improve the user experience for everyone from insurance agents to policyholders. Here are the six best use cases for insurance carriers, agencies, MGAs, and MGUs that want to power their business with shared data both today and for the future.
APIs for collecting quotes from multiple insurers
Before we get into more cutting-edge APIs, it’s worth noting this oldie but goody. Software, known as raters or aggregators, have been doing this for a long time. So long, in fact, that consumers know and expect their insurance agents to be able to collect their information once and come back with a variety of quotes from different carriers.
To be blunt, this is the pumpkin spice latte of insurance APIs. If you’re not already using APIs to send data to insurance carriers and retrieve quotes in return, you’re about 10 years behind the curve. This doesn’t mean you have to be overly technical or a programmer yourself: There are plenty of prebuilt software options that give agencies and agents an easy way to leverage this technology.
APIs for embedded or point-of-sale insurance
We’ve written previously about the growing trend of embedded insurance. Consumers now have options to add insurance at the same time they make a large purchase (cars and vacations come to mind) – and it’s all powered by APIs.
In this case, a travel website selling vacation packages (for example) uses APIs to send and receive data between itself and a carrier that offers travel insurance. Without ever leaving the site, a customer can add the exact travel coverage they need using information the website already has from their purchase: travel dates, travel location, names of passengers, and so on.
This can be an easy and profitable way for an insurance carrier to bring in new business with no human touches or manual effort required. The only trick is setting up the API and making it available for travel websites to use.
APIs for tracking user behavior
The Internet of Things (IoT) and smart devices that connect to them are a growing trend in insurance across the board. Collectively known as telematics, this process involves collecting data from multiple sources and using technology to interpret that data into usable information about a person or piece of property that’s insured. Smart devices can range from heat and water sensors to wearables like watches and rings. And the way data is collected from many sources is, you guessed it, with APIs.
As consumer demand for more “personalized” insurance products grows, everyone from auto insurance companies to life and health insurance companies are starting to base their risk calculations (which translate into rates and premiums) on actual data they collect from the insurance applicant or policyholder.
A few examples include:
- Using the location from your mobile phone to tell the insurance company’s app where you are, how fast you’re going, if you make sudden stops, and even if you’re using your phone while driving.
- Using heart rate, activity level, sleep tracking, and other smartwatch capabilities to assess an applicant’s health beyond just asking medical questions for a life insurance policy.
- Using smart devices to detect patterns and anomalies in behavior, for example, a truck driver who deviates from the standard route and goes significantly faster than average could raise a red flag to the trucking company about the driver’s health.
In each of these cases, insurance carriers have their own technology that pulls data from external sources. And APIs are the mechanism that makes it happen.
APIs for customer support and self-service
We all know the frustration of trying to get to a real person for help when all a website wants to give you is a chatbot. That doesn’t mean, however, that chatbots can’t be useful and solve some portion of consumer inquiries. To do this, a chatbot has to be connected via APIs to an insurance carrier or agency’s customer relationship management (CRM) software, and likely a few other key pieces of technology.
Perfectly reasonable chatbot uses include:
- Answering straightforward customer questions like when their policy renews, how much their monthly premium is, what their deductible is, etc.
- Allowing customers to report a claim and get the process started.
- Allowing customers to quickly make simple policy changes like adding a vehicle or removing a driver from an auto policy.
In each of these use cases, the chatbot is both intaking information from the customer and transmitting that information to another piece of software at the insurance company or agency. As long as the user can quickly get to a human representative when they need one, insurance chatbots can answer many of the quick and easy questions people ask. This means the live agents and representatives can spend more time with people who have more complex needs – ultimately providing a better experience for both types of users.
APIs to check compliance at all stages of the producer or adjuster lifecycle
APIs aren’t just vital on the front-end, consumer-facing side of insurance. They can be used to streamline and automate daily operations, ultimately reducing costs for insurers and agencies. One major way this is happening currently is by using software that connects (yes, via APIs) to the original source of truth about producer license status and compliance.
What does this mean, in practice? Using APIs to connect each agent’s or adjuster’s information with their official record means:
- Producers and adjusters can onboard quickly without having to re-enter information they’ve previously entered at another company or in another state.
- Necessary background checks can integrate seamlessly into the process without the need for duplicate data entry or potential mistakes and oversights.
- If someone enters new/different information, it gets updated in the source of truth so it’s accurate next time they start the process.
- Insurance carriers can easily see how many agents and adjusters they have who are licensed, appointed, and ready to sell – or adjust claims – in each state with up-to-the-day accuracy.
- Agencies and carriers can view the real-time compliance status of anyone selling insurance and even be alerted when someone falls out of compliance to prevent a sale closing or a commission payment being issued when it shouldn’t be.
If you’re an insurance carrier, agency, or MGA/MGU and you like the sound of that, check out AgentSync for streamlined, automated producer onboarding, licensing, appointment, and renewal management, along with Varicent for fully compliant agent compensation management, and VerifiedFirst or Accurate for integrated background checks.
APIs that use data to predict claims and provide early alerts
Similar to predicting human behavior, APIs can power other devices connected to the IoT that’ll inform both insurers and policyholders of potential risks and actual damage. Parametric insurance, for example, relies on high-tech integrations to provide real-time data back to the insurer so it’s clear when a policy condition’s been triggered.
Flood insurance is at the forefront of using smart devices and APIs to transmit data from the insured property to the insurer. A common example is using water sensors in a building to immediately know if there’s been a flooding incident. This can alert the property owner, kick off the claims process automatically, or even provide an early warning before the water reaches a truly damaging level.
Even for more traditional types of property and casualty insurance, like auto, smart sensors in cars can detect a crash and alert emergency services and the insurer of the situation.
APIs will power nearly every insurtech innovation, present and future
Hopefully, it’s now clear that APIs are an integral part of daily life whether you work in insurance or just like to work or shop online. Many of the things we take for granted as part of modern life are only possible because two (or more) software applications have agreed to exchange information with one another.
Just like APIs enable our modern and convenient lives, they’re going to become more and more vital to the way insurance policies are underwritten, sold, and used by consumers. So, you don’t have to adopt APIs as part of your technology strategy at your insurance company, agency, or MGA/MGU. But not doing so puts you at a major risk of being left behind as consumers and producers alike flock to work with the companies that make their experience fast and seamless.
AgentSync Manage is built on the concept of a multi-directional information exchange between the insurance industry’s source of truth and each user. This allows it to monitor producer, adjuster, and broker-dealer compliance across all states and territories, across all lines of business, and provide real-time status updates.
If you’re spending hours each day trying to stay on top of manual compliance, reach out today to see how AgentSync can help.