Author: Eugene Khazin, Principal and Co-founder, Prime TSR
Whenever I talk to insurers, whether boardroom CEOs or small-time independent brokers, the buzz is all about major disruptions hitting the industry. Everyone is chiming in about telematics, automated cars, Insuretech, “insurance as a service” platforms, you name it.
Many are plain scared their business lines are not built for long-term success, and there’s some legitimacy to this fear. A 2017 IBM study showed that 41 percent of consumers surveyed switched carriers because their current one couldn’t meet their changing needs.
So, what do you do if you’re a CIO or IT Director tasked with adapting your legacy tools and systems to sync with the latest digital trends? How do you find new ways to innovate your existing technology? There are plenty of great use cases for the technology in Insurance and Insurance API’s are driving new types of service offerings for various use cases.
Cost efficiency is driving insurance innovation
Let’s take a look at the top 10 metrics Insurance companies measure:
- Revenue per policyholder
- The average cost per claim
- Average time to settle a claim
- Return on surplus
- Loss ratio
- Frequency of claims
- Severity of claim
- Components of claim costs
- Expense ratio
- Renewal/retention rate
Notice a trend? They are all related to cost efficiency. Basically, how do Insurance companies make more per policyholder? How do they reduce the risk of frequent and/or big losses?
Out of all the APIs out there, it’s not about which one is the most “innovative.” It’s about how digitization drives one of those key KPIs.
“McKinsey estimates that up to 40 percent of P&C and life insurers’ expenses are locked up in their top 20 to 30 core end-to-end processes—costs that digitization can reduce, and in some cases, eliminate.” [src]
The journey to digitizing your insurance company must begin with a deeper awareness of what software integrations are available on the market. The following represents a list of the 5 most popular Insurance APIs available today.
These are market areas you should be paying attention to if you want to stay relevant, but don’t overlook the implementation challenges if your systems are as outdated as most insurers.
Bots replacing brokers
Onboarding mobile, cloud, Big Data, and integrating APIs are an obvious path to staying progressive. New incumbents like Lemonade have set the bar high in this regard. Who can beat a motto like “Instant everything? Killer prices. Big heart.”?
Lemonade arrived on the scene in 2015 with a business model focused on behavioral economics and technology. The company makes it easy for people to sign up for renter and homeowner insurance policies by using artificial intelligence, chatbots, and smart devices to handle claims and eliminate paper trails and brokers. The company says that policies can be purchased and claims paid within minutes rather than days or weeks.
In April, Lemonade announced a new funding round of $300 million by Softbank and has continued to receive numerous accolades across the industry for its disruptive insuretech model. One of the most unique features of Lemonade is its REST API, which allows anyone to sell policies, including getting quotes and making payments through their own website.
CEO Daniel Schreiber sums up the company’s approach this way, “When you use technology well, you don’t just collapse costs, you delight consumers because computers will operate in a faster way and give instantaneous responses.”
Insuretech as a service for small & medium businesses
CoverWallet is another recent startup in the digital insurance space. Founded in 2016, the company bills itself as “The first API for commercial insurance.” CoverWallet aims to simplify how SMB businesses sign up for insurance by providing the full lifecycle of estimates, quotes from leading carriers, and management services.
With CoverWallet, a restaurant can go on the application and get a quote, find comparable rates paid in the food industry, select a carrier and limits, and decide on payment terms. After a few minutes and several questions, the application will return a policy, certificate of insurance, and proof of payment.
CoverWallet sees itself as providing Insuretech as a Service—in other words, a fully integrated experience where businesses can seamlessly take care of all their commercial insurance needs in one convenient location.
Real-time P&C claims processing
Snapsheet offers real-time claims processing for both insurance carriers and customers, and dramatically cuts the time it takes for the handling of estimates and payouts.
Instead of waiting for a claims specialist to check the damages, car-owners can simply install the Snapsheet app, take pictures of the damage, and upload them. The Snapsheet team then reviews and sends the customer an estimate in hours rather than days.
Snapsheet’s payment portal, called Snapsheet Transactions, is an end-to-end payment hub, where claims and expenses can be paid to repairers and customers. Snapsheet Transactions can be integrated either through a web-based integration or direct API.
Snapsheet proves how technology can transform a broken insurance process that has an endless paper trail and verifications into one that can be seamlessly done with a few clicks on an application.
Simplifying term life insurance
Onboarding a life insurance policy has historically required a visit from a nurse or medical professional followed by the typical paperwork. But today that has all changed.
New customers can now go to the Haven Life website, answer a series of questions about their lifestyle, personal health history, family health history, and get a decision on a personalized term life policy within minutes.
Thanks to the advances in algorithmic underwriting and the integrations of APIs to third-party vendors like the Medical Information Bureau, DMV, and Social Security Administration, purchasing term life insurance is now seamless. Backed by MassMutual, Haven Life offers policies up to $3M in coverage.
The Haven Life API also offers businesses an easy way for customers to purchase life insurance directly online. With a few lines of code, the API can either be embedded in a website as an optimized quote widget or as a REST API that allows for more flexibility in the user experience.
Giving patients peace of mind
According to a recent report, “67% of Americans are either very worried or somewhat worried about unexpected medical bills (compared to 41% who are very or somewhat worried about paying their rent or mortgage).”
Health issues are stressful enough, but imagine if you had full transparency on medical costs before the treatment or could seamlessly navigate the patient and billing cycle. Eligible does just that; it’s an all-in-one health insurance eligibility service that protects patients from receiving surprise medical bills.
Eligible’s Health Insurance API works by providing users with lookup information on over 700 insurance companies. The information available includes patients’ active versus inactive status, coinsurance, copayment, deductible, health spending balance, and specialty-specific information such as MRI and diagnostic labs.
With Eligible’s API in place, companies can build consumer scheduling applications, check-in kiosks, and back-office denial management solutions to help bring more consumer-friendly and seamless processes to the healthcare insurance industry.
The insurance industry is a bit of an anomaly. While it has a notable reputation for being behind the eightball when it comes to technology innovation, enormous changes are happening across all sectors, in everything from P&C to healthcare to life.
The last thing any insurance professional can claim is that they didn’t know better. While the above list is just a sampling, it’s safe to say that the Insurance API economy is alive and well with large numbers of startups and businesses now seeking to disrupt the $4.5 trillion dollar insurance industry.
The important key for insurers today is not getting caught in one of two extremes of doing nothing or doing everything all at once. You don’t need to revamp your entire infrastructure, nor do you dare follow the status quo.