How to Construct a Scalable Insurance Infrastructure Through APIs


Bill Suneson, Co-Founder & CEO, Bindable

You may have heard the expression, “when you are a hammer, everything is a nail,” and, for a long time, that sentiment has summed up insurance technology. The industry has traditionally funneled customers into a purchase flow that prioritized the needs of the company, not the needs of the consumer. But now, as better digital experiences have become table stakes, it’s time for insurance leaders to go back to the toolbox and build what customers expect and deserve: transparent, convenient, and relevant insurance offers. 

According to our recent research, 64% of consumers would leave their current insurance company for one that offered more convenience. This shouldn’t be that surprising, especially in today’s digital-first environment.

Just look at Amazon; they didn’t get to 153 million Prime members in the U.S. just by selling books. Instead, they figured out how to increase shopping efficiencies — such as fast and free shipping, one-click purchases, and saved payment information — that far surpass the capabilities of even their closest competitors. So, for every insurance company that is trying to crack the code on customer retention, convenience should be considered the lowest of the low hanging fruit.

Creating consumer convenience is fueled by APIs that connect the dots behind the scenes to serve up better experiences on the front-end. Amazon was built on APIs, allowing the brand to position themselves in the middle of an ecosystem surrounded by all the components of retail (products, merchants, shipping, payments) to initiate a seamless consumer experience.

In fact, APIs are so critical to Amazon’s success that in 2002 Jeff Bezos reportedly sent a memo to Amazon employees mandating that all teams must “expose their data and functionality through service interfaces.” He ended that memo with, “Anyone who doesn’t do this will be fired. Thank you; have a nice day!” That was almost 20 years ago, and yet we are only just now starting to see more and more about the API economy in the insurance space. 

To truly have a digitally enabled insurance ecosystem, connections among technology platforms, insurers, brands, agents and consumers must be streamlined through APIs. Once this happens, better value will be created for all involved through the secure sharing of data.

For instance, consumers who go to acquire a mortgage can now be offered homeowners insurance and a home warranty through an API integration between the financial institution and the insurance provider. Or those that sign a lease for an apartment can now be offered renters insurance or other types of coverage that make sense at the time of purchase through API enabled partnerships between a realtor and carrier.

Considering that 65 percent of people are willing to purchase insurance from a non-insurance brand, these types of interactions just make sense. Consumers don’t always want or need to look to carriers directly for help with their insurance needs. They just want the coverage they need, when they need it, without extra steps and research; they want convenience.

The challenge that remains in our industry is that the value chain is only as strong as its weakest link. If consumers have a quick and easy purchase process but updating their address, filing a claim, or other interactions are difficult, then we are still not providing the best possible customer experiences, especially as compared to other sectors (which ultimately set the performance bar for all interactions). We need all parties in the insurance journey to invest in digitizing their products and services in order to truly capitalize on the benefits of an API-driven ecosystem.

There is so much potential to take the onus of discovering and buying insurance away from the customer and streamline the entire process, but it all starts with enabling systems to talk to each other via APIs. Businesses without a clearly thought-out approach to APIs will ultimately discover it’s tough to survive in this new iteration of our industry.

Perhaps we should start thinking of APIs as our hammer and opportunity as our nails.

This content originally appeared in PIMA's Insights Magazine, 2021, Issue 2