“What are APIs, and why are they so important when acquiring a new insurance system?”
CodeEast “Tech Talk" Series
APIs (Application Programming Interfaces) enable Digital Solutions to connect and share data and services. They are the glue that binds Digital Systems together. They allow applications built on different technologies and located in separate regions to connect and work as an integrated unit.
Technically, we can picture an API as a software interface that sits between two or more systems enabling them to share data and services. System A calls the API of system B and requests data, and system B uses the API to return to system A the requested information. A particular type of API called a ‘Web API’ enables this interconnectivity to occur across the Internet.
A document called an ‘API definition’ explains to a technologist how they can connect with an API and what functionality and data is available. The details about the internal operations of the system behind the API are hidden. This feature makes it easier for the technologist to maintain and upgrade API-based solutions. Security is also a critical aspect of an API design and involves the use of technologies such as tokens, encryption, throttling and API gateways.
APIs provide many benefits to insurance companies and MGAs. They include:
Support for the division of labor: APIs enable graphic designers to develop front-end customer-facing applications, platform development specialists to provide the Backoffice policy sales and distribution management system and underwriters to use Artificial Intelligence. Blockchain and external data sources to implement rating rules for premium calculations.
Connectivity with existing systems: APIs can combine old existing systems with new digital solutions, thus protecting the current business while the insurance company explores new Digital initiatives.
Automation of Operations: In combination with the Cloud, APIs have transformed the capability of technology to automate end to end business operations and deliver self-service capability to end-users. The advantages of this API-enabled automation are manifold, including lower operating costs, reduced headcount, decrease in capital spending, faster new product development, better customer service, real-time business performance analytics and new business model delivery.
The takeaway from this article is when you are considering acquiring a new insurance system, you should ensure that it has a comprehensive library of APIs. This library will enable it to connect and share information and services with the other systems you will use today and in the future.