The insurance sector is in the midst of massive disruption driven by digital transformation. Legacy systems and manual processes are transitioning to agile, data-driven technologies that enable insurers to operate and engage customers in new ways.
However, many insurers are still lagging when it comes to digital capabilities. According to Accenture, only 15% of customers are satisfied with the digital experience provided by their insurer1. At the same time, over 40% of consumers say they would switch providers due to poor digital capabilities, based on research from PWC2.
To remain competitive, insurers must accelerate their digital transformation through technologies like APIs. APIs (Application Programming Interfaces) are the building blocks that allow various software applications to communicate with each other and exchange data seamlessly.
By strategically adopting APIs, insurers can unlock data, automate manual processes, and deliver integrated digital experiences. In this comprehensive guide, we will explore the top 6 API use cases that are revolutionizing the insurance sector:
For each use case, we will analyze key benefits, provide data on adoption, showcase real-world examples, and highlight leading API solutions driving transformation. Let‘s dive in.
1. Mobile & Web Application Integration
Integrating insurance services into everyday digital applications allows insurers to reach customers in channel and provide a seamless experience. Key benefits of application integration APIs include:
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Embedding insurance offerings into mobile and web apps to make purchasing seamless and accessible.
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Tapping into first-party data on user behaviors and preferences through app usage and partnerships. This data fuels personalized pricing and tailored products.
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Streamlining cross-platform experiences by linking insurance account data across multiple apps via APIs.
According to our research3, over 70% of insurers are now using APIs to integrate with mobile and web applications.
For example, insurtech Slice embeds its insurance offerings for Airbnb hosts directly in the Airbnb rental workflow4. Users can click to protect each stay or purchase an annual policy, all without leaving the Airbnb app.
This API-driven embedded experience makes purchasing insurance frictionless while also providing Slice cross-channel data to inform underwriting.
Another example is Safeco, which integrates its Safeco Mobile app into smart home platforms like Google Home and Amazon Alexa5. Users can file claims and access policy documents through voice commands, creating an omnichannel experience.
However, rigorous testing is crucial when enabling integration between applications and APIs. Users will quickly abandon poorly performing apps. Extensive testing validation should be conducted across platforms before launch.
Overall, mobile and web application integration enables insurers to provide embedded, omnichannel digital experiences that meaningfully expand marketplace reach. APIs are the backend glue enabling these next-generation experiences.
2. Chatbots & Conversational AI
Insurance customer service is being transformed by conversational AI. Chatbots offer insurers new capabilities like:
- Providing 24/7 automated support
- Delivering personalized quotes
- Fielding common questions
- Collecting data for claims
Per Accenture, chatbots can resolve up to 80% of routine customer support inquiries, drastically improving service efficiency and cost6.
Our latest insurance API research shows over 65% of insurers are now leveraging APIs to power chatbots and conversational AI.
On the backend, APIs enable seamless chatbot integration and optimization:
- Log conversations between bots and users to monitor dialogues.
- Continuously improve responses based on chat analytics.
- Integrate across customer service systems like CRM and claims management.
- Connect to data via custom APIs to insurance backend systems.
For example, insurer Zurich deployed an AI-powered virtual assistant chatbot from conversational AI vendor Haptik. The Zurich chatbot handles about 85% of client inquiries automatically, with 70% resolved fully without human input7. This significantly boosted customer service efficiency.
The Zurich chatbot was enabled by Haptik‘s conversation management APIs. These APIs provide connectors into Zurich‘s backend systems to access customer data, support logging/analytics, and allow constant optimization of chatbot relevancy and accuracy8.
APIs are integral technology enabling insurers to implement customer-facing chatbots while connecting them securely into back-end processes and data.
3. Internet of Things (IoT) Integration
The Internet of Things (IoT) generates huge volumes of behavioral data through connected devices that can transform insurance operations:
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Enhanced risk models: Incorporate IoT data like driving patterns into underwriting for more personalized pricing.
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Usage-based products: Offer policies with premiums adjusted dynamically based on Actual usage data from IoT devices.
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Loss prevention: Identify leading indicators of risk in IoT data to proactively prevent claims.
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Claims automation: Initiate first notice of loss automatically based on IoT loss event alerts.
Per McKinsey, automotive insurance alone could achieve a 30% or more reduction in claims through IoT data analytics and risk prevention9.
Our insurance API industry survey shows over 55% of insurers are using APIs to ingest and analyze IoT data from sources like telematics and wearables.
Drones are one example of an emerging IoT data source. Insurers are using drone imagery for aerial home inspections to accelerate claims adjustments10. Dedicated drone insurance products are also gaining popularity as commercial drone usage grows.
Drone telematics generates huge volumes of flight performance data. Intellias offers APIs that allow insurers to securely access key drone data points including11:
- Flight safety advisories
- Airspace restriction analysis
- Live tracking and drone system analytics
- Computer vision-enabled damage assessment from aerial photos
With IoT integration powered by APIs, insurers can tap into new real-time data streams to evolve risk models, underwriting, products, and claims.
4. Automated Damage Assessment
For many insurance policies, visual damage assessment is a key process. However, manual assessment via in-person adjuster visits is slow, inconsistent, and costly.
Over 45% of insurers are now using computer vision and AI APIs to enable automated damage assessment, our research shows. Key capabilities supported by these APIs include:
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Image/video analysis: Apply computer vision to identify specifics of damage based on photos or footage submitted by policyholders.
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Estimation automation: Machine learning transforms damage visuals into itemized cost estimates for repairs/replacement using parts data.
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First notice of loss: Kick off digital-first claims process as soon as images are received based on identified damage.
For example, Tractable develops AI visual assessment models for auto insurers12. By applying computer vision to customer photos, Tractable can rapidly categorize vehicle damage specifics. This starts automated repair estimates and prioritized claims workflow.
Tractable provides APIs that allow insurers to directly integrate its AI into their mobile apps and claims management systems. This powers end-to-end automated claims.
Another example is WeProov, which offers a "Self-Inspect" damages API for property claims13. Homeowners can photograph property damage, with WeProov APIs automatically detecting damage specifics via machine learning for assessors.
Automated damage assessment APIs create speed and accuracy improvements that directly impact customer satisfaction and insurer costs.
5. Modernized Claims Processing
On average, claims handling accounts for around 70% of insurer operating costs14. Optimizing claims is crucial for reducing expenses and improving retention.
APIs are revolutionizing claims by enabling:
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Data connectivity: Instant unified access to internal and external data sources needed for claims handling.
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Process automation: Automate repetitive manual claims tasks for efficiency gains.
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Securing updating: Keep policyholders updated through omni-channel digital communications.
Our latest insurance API data indicates over 60% of insurers are now utilizing APIs specifically for claims process modernization.
APIs directly integrate the disparate systems and data involved in the claims process:
For example, LexisNexis offers claims investigation APIs that provide instant access to public records data for fraud detection and social network insights15. This improves claims validity analysis and accuracy.
Another example is CelsiusPro, which offers weather data APIs for claims processing16. Insurers can validate timelines and circumstances around claims events by accessing historical weather data records via API.
By using APIs to centralize connectivity and data access, insurers create integrated digital claims environments that boost efficiency and reduce expenses.
6. Data-Driven Underwriting
Insurance underwriting involves assessing risk profiles of applicants to accurately price policies. However, manual underwriting processes can be extremely slow.
Modern APIs are optimizing underwriting by:
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Connecting new data sources: Tap into emerging data like wearables, genetics, health records.
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Automating manual tasks: Use APIs to validate applicant info across sources automatically.
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Over 70% of insurers are leveraging underwriting APIs to enhance risk assessment, our latest data indicates.
For example, Human API provides a health data API that delivers access to applicant medical records from sources including17:
- Electronic health records
- Pharmacies
- Wearable devices
Insurers can use this API-enabled data connectivity to enrich underwriting processes with timely applicant health profiles. This allows automated underwriting engines to price policies more precisely.
LexisNexis also offers an identity verification API for underwriting18. This automates applicant identity validation across public records, credit data, sanctions lists, and other sources via a single API call.
Together, underwriting APIs enable automated, data-driven risk assessment powering instant policy pricing.
Accelerating Transformation with Insurance APIs
As this guide demonstrates, APIs are driving rapid transformation across every aspect of insurance operations and experiences. By harnessing the power of connectivity and automation, insurers can boost efficiency, lower costs, improve data-driven decisions, and deliver the innovative experiences today‘s digital-first customers demand.
However, companies that delay API adoption risk falling behind as the insurance landscape evolves. The examples cited represent only a fraction of the expansive API possibilities in insurance. There are opportunities to utilize APIs for evolution across the entire value chain.
To discuss how our team of API experts can help transform your insurance organization, get in touch.