A Proven Innovation: why do insurers need an API?

5 Minute Read
Many insurers don’t understand what an API is, or how they could benefit from the simplicity and speed of data exchange that these APIs can afford them.
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Photo 1617791160536 598cf32026fb cropentropycstinysrgbfitmaxfmjpgixid Mnwx M Tc3 M3wwf DF8c2 Vhcm Nof DF8f G Jy Y Wluf G Vuf DB8f Hx8 MTY3 O Dg4 MDA1 Mwixlibrb 4 0 3q80w2000

Spreadsheets have been a key feature of the insurance industry since the dawn of Excel. The primary tool that has allowed generations of insurers to collate and store the masses of data they need to write business in a secure and convenient location.

As time has moved on however, insurers have found themselves working across multiple spreadsheets, manually rekeying data and relying on receiving weekly, monthly or even annual risk data via bordereaux that can be significantly out of date by the time they get their hands on it.

This is a big problem for property insurers in particular. The property landscape in the UK is changing all the time and traditional methods of data collection, interrogation and storage just don’t have the ability to keep up.

There are over 5,000 daily changes to the UK’s national address file, with 25,000 new addresses and 3,000 new postcodes being created each month.

No spreadsheet or internal database can possibly keep up to date with such frequent changes.

Application Programming Interfaces, or APIs can, but many insurers don’t understand what they are, or how they could benefit from the simplicity and speed of data exchange that these APIs can afford them. They are therefore missing out on business by not quoting on addresses they have wrong, or new builds they simply haven’t got the data for.

Why APIs?

Some new entrants to the market are breaking the mould, moving faster than the incumbents, pricing more aggressively and offering a more attractive proposition to their customers.

However, they are not doing this by building their own services, this costs too much, takes too long and consumes resources they don’t have. Instead, they are using APIs to integrate a myriad of services into their workflows and deliver a modern insurance service.

APIs offer the ability to connect to a wide range of external services, so insurers don’t have to build everything themselves. This is simply more efficient, saving insurers money and time, and if implemented correctly, delivers a more up to date, engaging, flexible and profitable insurance service.

Better for insurers…

Good APIs come as a service, a preconfigured product, they are up and running and ready to go. This offers a significant step up for those insurers looking to fulfil a particular function within their insurance workflow.  No need to train or hire staff, design, and write code, insurers can simply adopt an existing and proven service.

Whether that is to correctly capture the right address at the point of enquiry, prefill the quotation with the customer information, or even assess their property for the risk of flooding, all this is possible with a pre-configured API.

Flood Re required a real-time system to connect insurers with addresses suitable for ceding. Sharing a spreadsheet or hosting a database with constantly changing addresses for the multitude of UK insurers and software houses supplying flood insurance, simply wouldn’t cut it. An API solved the problem, enabling 14 major insurers and software houses to have directaccess a live API and a further 400 users access via a dedicated portal. This API is now delivering over 60m transactions per month all in under a second.

The right APIs for instance, could add multiple flood risk scores for each property rather than relying on a single score, or can push data to pre-fill quotations and support the pricing of the quotations simultaneously, ensuring that whatever data is provided is up to date. Spreadsheets and databases simply cannot offer this flexibility.

Even better for customers

In the world of price comparison sites, speed, service and pricing are everything, and APIs could be the secret to higher conversion rates and more satisfied customers. A good customer journey and speed can be the difference between a customer taking out a policy on the platform or not, as well as driving whether they return to the site again.

The customer journey on these sites is often complex, with policyholders required to fill out a large number of questions about their property, some are poorly worded and often customers simply don’t know the answer to the in-depth questions about their property.

We can use an API to pull in a huge volume of available data about an individual property using only the customer’s postcode, this allows us to accurately pre-populate these question sets meaning a faster, smoother journey for the customer, but also better quality of data for the insurer to price the risk – a win-win.

Compare the Market recognised that being able to prefill endless customer questions with accurate and reliable property information from Addresscloud, would bring endless benefit to their customers and to their own business. Using Addresscloud’s ‘Intelligence API’, over 10 million questions have been pre-filled by Compare the Market customers with a high degree of accuracy, saving them time and making the experience of finding a home insurance quote significantly quicker and less stressful.

We’ve focused here on the benefits of API’s for improved customer journeys, and more accurate data capture, but APIs also offer flexibility and scalability to insurers looking for rapid growth and the agility to react to market conditions.  Stay tuned for APIs ‘part 2’ where I’ll explore even more benefits of this insurance must-have...

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