Insurance Digital Transformation: How API Analytics Can Lead the Way

APIs play an integral role in speeding insurance digital transformation efforts. While updating legacy IT infrastructure and developing new monolith applications will require years of commitment, API integrations unlock immediate business value. They achieve this by bringing disparate internal and external apps, services, and databases together to create customer-centric experiences.

But first, what is insurance digital transformation? And how is it changing the insurance landscape? 

Insurance digital transformation involves modernizing services and lines of business using technology to meet rapidly changing consumer demands. Traditional insurance processes, such as quoting, policy comparisons, and claims management, are being rapidly streamlined by technology. Customers have come to expect digital tools from insurers that are on par with popular apps and services like Amazon Prime and Uber. 

Dozens of use-cases for APIs in insurance exist. An often-overlooked aspect to this process is the role API analytics can play in speeding your insurance digital transformation. In the following paragraphs, we will discuss API analytics across internal and external APIs, and how to use these metrics to inform key digital transformation decisions in the insurance industry.

Insurance Digital Transformation: The Current Landscape

In a recent PwC survey, 71% of CFOs ranked financial impacts to be among their chief concerns with respect to the effects of Covid-19. But even before the pandemic, insurance providers struggled to keep up with InsurTech disruption, and the mounting pressure of evolving customer demands. Many have adopted digital transformation efforts in response. In a recent survey of insurance organizations leveraging digital transformation, 77% of respondents cited improving customer and channel experiences as their motivating factor. Just 55% cited implementing advanced data and analytics as a motivator. The truth is you simply can't improve customer experiences without having a strong data and analytics approach. 

API Analytics: The North Star for Digital Transformation

While API’s deliver on improving customer and channel experiences, it’s impossible to make sound decisions without an API measurement strategy. This is where API analytics come into play. When insurance providers adopt an API-driven architecture, they can consolidate various analytics dashboards traditionally retrieved at different layers of the technology stack. With access to a consolidated view across internal APIs, open APIs, and third-party APIs, leaders can make strategic business decisions using a refined view of their entire digital transformation ecosystem.

There are two main categories of API analytics, including operational and business-oriented.

• Operational API analytics: 
  • Provide insights surrounding API usage. For example, these could demonstrate in which application people process claims most often. Or how many distribution partners retrieved quotes through your system.
• Business-oriented analytics:
  • Provide deeper intelligence on specific transactions often using customer data. These could demonstrate which policies are searched for in particular geographies, or which products customers most frequently seek to bundle.

In the following paragraphs, we will discuss a mix of operational and business-oriented analytics, using specific insurance innovation scenarios to demonstrate their potential impact.

Opportunities With Open APIs From External Websites, Networks and Apps

Incorporating external open APIs within your digital ecosystem can drastically improve the customer experience. Open banking has led the way with this trend, ushering in an era of seamless customer banking experiences. To follow in their footsteps, insurance companies can leverage data found across weather apps, vehicle databases, and travel aggregators to enhance the customer experience within their apps, services, and websites.

Insurance organizations can then use API analytics gleaned from API usage to inform key business decisions, or even open new lines-of-business. Countless opportunities exist across vehicle, property, life, and travel. Consider just a few of the following possibilities:

API Analytics From Automobile Aggregators

Hundreds of external APIs are available within the automobile sector. For example, J.D. Power APIs allow insurance providers to leverage data surrounding used cars, trucks and industry-wide trends. By pulling this API into your insurance app or website, you could cross-check customer vehicle information with the latest values from J.D. Power. Thus, improving the accuracy of pricing for used car policies.

Likewise, you could offer your customers access to car safety ratings within your digital ecosystem, adding value during their car, or insurance shopping journeys.

• Savvy providers can measure the use of these APIs within their ecosystem, and evaluate whether they improve customer engagement, and impact policy accuracy.

Analytics From Weather APIs 

Dozens of weather APIs can be leveraged, offering added value to clients across property and car insurance, while yielding new insights for the business. Imagine pulling local weather alerts into your app to alert customers that major weather events could damage their property. Or following inclement weather, notifications could be sent to customers in specific geographies to automate, and expedite the claims experience.

• Usage analytics tied to these APIs can demonstrate how effective your application is at helping customers avoid property damage and prepare for inclement weather. Likewise, API analytics could demonstrate improvements in triggering the claims process – and all of it by tracking the usage of a single API.

Analytics From Property APIs

New property APIs are popping up that can be leveraged within digital insurance ecosystems. Imagine offering existing or prospective customers an application or website feature that lets them check a property for past damage claims, or previous sale prices. This pre-insurance intelligence offers both customers and the insurer the data they need to minimize future claims, or to avoid undesirable property.

• Tracking the usage of this API within your ecosystem, you could easily compare API usage with customer retention, or whether the feature increases the speed of customer onboarding.  

Innovation Opportunities With Internal Open APIs

As you already know, digital disruption has reshaped the customer experience landscape well beyond the insurance industry. Competing with InsurTechs and staying ahead of the industry’s growing customer experience needs can be achieved by building APIs that connect microservices within your organization. And to services and customers outside your company. APIs can simplify the journey across claims, quoting, new business interactions, and apps, all while increasing your footprint on third-party sites and applications. Consider the following methods for leveraging API analytics to inform business decisions:

Claims Analytics

Your customers can likely start and finish the claims process across a variety of digital channels and apps. Building claims APIs to connect various microservices architectures can simplify the customer journey and allow you to keep tabs on the efficiency of various claims methods.

• A single claims API view can demonstrate which claims channels customers prefer, percentage of claims completed per channel, time to completion, and customer satisfaction. This data can be used to improve the overall claims ecosystem, as well as to improve customer retention.

Quoting and New Business Analytics

The quoting and application experience have become increasingly democratic, with customers expecting access to tools within their preferred channel, app, or aggregator website. Building internal APIs for third-party websites and applications to leverage allows your potential customers to access policy information and quotes, without directly visiting your website, or using your application.

• Using APIs to track quoting activity across each touchpoint can help you prioritize marketing spend, analyze customer acquisition trends, and develop targeted campaigns in relevant channels.

Digital Agent Analytics

Covid-19 has created new barriers for customers who prefer to work face-to-face, or over the phone with agents. APIs can be used to connect agent portals, apps, and relevant customer tools. With an API-centric model, you can analyze agent and customer usage of apps, discover gaps in service, and create new opportunities for digital service of traditional clients.

Disruptive Opportunities With Internal Closed APIs

Contrary to popular belief, APIs are not just for external use cases. Closed and internally-managed APIs can be used to connect various lines of business. This can increase operational efficiency, improve security, and drive cost-savings. Insurance organizations can benefit from an API-driven architecture to consolidate platforms and build greater strategic value within the IT department. Consider the following API analytics scenarios:

Providing Cost-savings and Increasing Value

An API-driven architecture allows you to perform IT rationalization using a single analytics view at the highest layers of your stack. This allows you to uncover redundancies, find areas for cost savings, and ultimately discover technical value drivers within your IT operations.

• Consider tracking database and cloud performance, storage, application utilization, project management systems, employee application engagement, and more.

Building Greater Operational Efficiency

Scaling APIs in between legacy systems, applications, and databases allows for a consolidated view of technical efficiency.

• Comparing application uptime, memory, CPU usage, or even employee engagement with systems can all lead to improved business decisions surrounding your internal end-to-end IT solution.

Improving Security

Every IT team’s security stack will be constructed differently, using a mix of legacy systems and integrations. Through APIs, you can streamline your security stack and triage threats in a single environment, effectively improving the speed at which you detect and mitigate security risks.

How Akana Can Help

For more on how APIs can reshape the insurance industry, download the Akana ebook – Foundations For a Digital Ecosystem: Applying Open Banking to Open X Across Industries. Or to see how Akana can speed your insurance digital transformation, watch a demo today. 

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