In IT, the acronym API stands for application programming interface. Its role is to create a common language to enable dialogue and the simple and automated exchange of data between application A and application B, which “don’t know each other”, are not programmed using the same language and are not physically in the same place.
APIs: the cornerstone of open insurance
By drawing on standards and moving beyond the languages in which applications are developed, APIs foster interoperability between different information systems. Although APIs were already adopted by insurers several years ago, they are usually integrated into a model of in-house APIs within a company. They easily enable improved interoperability of the different IT solutions used by an insurer or with a limited number of predefined partners.
The challenge for insurers that adopted the strategy a few years ago is therefore to capitalise on this experience and switch from an “in-house API” model to an “open API" model. By making this transition, insurers activate new growth levers by sharing their products, infrastructures or data with third-party developers that want to use them. At the same time, they acquire the technological resources to retain customers and deliver essential third-party services to them. In a market where trends come and go, the “open API” model also makes organisations that put it in place more agile. Implementing an open API is the only way for insurers to respond to the significant increase in the number of partners interested in distributing insurance services (start-ups, distributors, etc.). Conversely, the integration by insurers of external services provided by increasingly numerous partners necessarily involves the use of open APIs, which are easier and faster to implement.
The key factors for success in an API approach
Most insurers are still restricted by their organisational structure and their information system, which are not suited to this new approach. Far from being a mere technical subject to be left to the experts, APIs are genuinely a source of opportunity for insurers. However, to achieve this, many challenges need to be overcome to provide an faultless user experience to structures that may be interested in an insurance product available through an API:
Although there still seems to be a long way to go before all of these challenges are met, insurers need to take advantage of new product and service launches to start their APIsation strategy from the distribution aspect. To devise APIsed products or services, all stakeholders and in particular the IT division need to be included in the reflection process from the very start.
If you are interested in this topic, the Cegedim Insurance Solutions team is at your disposal to answer to all your questions.