Top 6 API Use Cases Revolutionizing the Insurance Industry in 2023

How satisfied are you with your insurance provider‘s digital capabilities? If you‘re like most consumers today, the answer is probably not very.

Recent research paints a concerning picture of how insurance companies are lagging in the digital race. One report by Accenture found that only 15% of customers are happy with their insurer‘s digital experience. And according to a survey by PwC, over 40% of policyholders say they‘d switch providers due to subpar digital interactions.

It‘s clear that insurers need to radically step up their digital transformation efforts. And one technology that should be at the top of their priority list? APIs.

What Are APIs and Why Do They Matter?

API stands for Application Programming Interface. Essentially, APIs act as a bridge that allows two separate software systems or platforms to communicate with each other.

APIs unlock all sorts of capabilities that are complete game-changers for insurance companies striving to meet modern digital expectations:

  • Integration – APIs easily connect insurers with third-party apps and data sources.
  • Efficiency – Automating manual processes and accessing real-time data via APIs optimizes operations.
  • Customization – APIs enable insurers to offer tailored, customer-centric digital experiences.

Let‘s explore the top 6 API use cases that are revolutionizing key facets of the insurance industry:

1. Mobile & Web Application Integration

New mobile and web apps are exploding across every industry, providing opportunities for insurers to expand their ecosystem of digital touchpoints.

Seamlessly integrating third-party apps via APIs allows insurers to:

  • Increase products/services – Embed insurance options into other apps or partner with solution providers.
  • Access user data – Gain valuable insights into behavior, risk profiles, and preferences.
  • Streamline integration – Smoothly connect an insurer‘s own systems with external apps.

According to McKinsey, over 55% of interactions between insurers and customers now occur in digital channels. So delivering flawless app experiences is more important than ever.

Comprehensive mobile testing and API testing is crucial to ensure apps and connectivity are glitch-free. After all, users quickly bail on dysfunctional apps.

Industry Impact:

  • Up to 20% revenue growth for insurers with the most mature API ecosystems.
  • Top insurers avg. 3-4X more APIs integrated than digital laggards.
  • 80% of developers say poor API performance disrupts speed of production.
Metric Average Benchmark
API call volume growth YoY 49%
Top reasons for API outages – Backend system failure (41%)
– Unplanned traffic spikes (35%)
Avg. hourly cost of API downtime $9,000 – $250,000

Key API benchmarks for insurance companies

2. Chatbots

By now, you‘re probably familiar with chatbots handling basic customer service queries or even purchasing flights and food. Insurance is one industry seeing rapid chatbot adoption.

Here are some of the most common chatbot use cases:

  • Provide 24/7 automated support for common questions
  • Deliver instant customized quotes to interested prospects
  • Facilitate the claims process by collecting required documents like first notice of loss
  • Keep customers updated on claims status and next steps

Zurich Insurance deployed an AI-powered chatbot that now resolves ~85% of client queries automatically with 70% handled entirely without human assistance. This boosts efficiency and fingertip self-service for customers.

APIs make chatbots even more powerful by:

  • Streaming conversation logs to continuously improve bot intelligence.
  • Integrating seamlessly with backend systems like CRM and ERP.
  • Enabling omnichannel support across platforms like WhatsApp.

Industry Impact:

  • 24/7 chatbot availability improves agent productivity by 20-30%.
  • Chatbots resolve queries 2.5x faster than humans, averaging 20 seconds per inquiry.
  • Virtual assistants expected to save insurers $11 billion annually by 2023.
Metric Chatbot Benchmark Human Benchmark
Average response time 20 sec 50 sec
Resolution rate per contact 70-90% 60-70%
Cost per contact $0.10 – $0.30 >$15

Benefits of chatbots vs. human agents

Top providers like Haptik offer chatbot APIs purpose-built for insurance needs.

3. Internet of Things (IoT)

By connecting previously "dumb" objects like cars, homes, and wearables to the internet, IoT generates reams of highly valuable data for insurers.

Insurers are tapping into IoT data via APIs to:

  • Assess risk more accurately with a 360-degree customer view.
  • Customize pricing with usage-based insurance products.
  • Detect fraud through real-time anomaly alerts.

McKinsey estimates that integrating IoT initiatives like telematics could reduce losses by up to 30% in lines like auto, health, and workers‘ comp.

Drones exemplify the insurance impact of IoT. APIs give insurers access to drones for more efficient claims adjustments. Providers have also started covering drones via IoT APIs containing data like safety and credentials verification.

Industry Impact

  • IoT enables insurers to achieve policy loss ratios under 30%, far surpassing competitors.
  • Real-time risk monitoring with IoT cuts premium costs by 25-50% for good drivers.
  • Up to 40% savings in loss adjustment expenses by using drone imagery.
Data Source Key Insights for Insurers
Smart home sensors Property usage patterns, repair needs
Wearables Policyholder health, risk levels
Telematics Driver behavior, accident risk
Drones Property damage, claims info

Examples of IoT data value in insurance

In addition to drone specialists like Intellias, platforms like Cumulocity offer purpose-built IoT APIs for insurance.

4. Automated Damage Assessment

In the past, claim adjusters needed to manually inspect any property or vehicle damage, which was time-consuming and prone to human error.

New automated solutions rely on AI and computer vision to assess damage from photos or videos submitted by the policyholder via APIs.

Key benefits include:

  • Cut inspection costs – No need to send an adjuster onsite.
  • Accelerate claims – Damage assessments in minutes versus days.
  • Improve customer experience – Faster resolution and payouts.

The WeProov API integrates computer vision algorithms that estimate vehicle damage severity from images with over 95% accuracy.

Industry Impact:

  • Up to 50% cost reduction for damage appraisals.
  • 90% shorter turnaround times with automated assessments.
  • Improves customer satisfaction – over 75% say speed impacts loyalty.
Metric Manual Appraisal Automated API Appraisal
Average cost per claim $150-$500+|$75-$100
Turnaround time 2-5 days \<1 day
Resolution accuracy ~75% 95%+

Automated damage assessment via APIs drives major efficiency gains

5. Claims Processing

For most property and casualty insurers, claims payouts amount to ~70% of premiums collected. Optimizing claims handling meaningfully impacts the bottom line.

APIs enable insurers to:

  • Access third-party data like weather history to validate claims.
  • Integrate internal claim systems with external partners in real-time.
  • Automate manual processes to improve efficiency.

Athenium’s weather API, for example, lets insurers pull historical weather data to verify claimed events. This reduces improper payouts and disputes by cross-checking geo-specific conditions.

Industry Impact:

  • $2.5M average annual savings from analytics-driven claim reviews.
  • Up to 17% improvement in loss adjustment expense ratio.
  • APIs cut administrative tasks by over 50% for complex claims.
Process Manual API-Automated
Claims data entry 20 min \<5 min
Information validation Hours-days Minutes
Settlement time Weeks-months Days

APIs drive dramatic claims processing improvements

Top providers like Claimatic offer purpose-built claims management APIs.

6. Underwriting

Accurately evaluating risk profiles and pricing policies is the foundation of insurance profitability. Yet underwriting is still plagued by manual processes that lead to delays and errors.

APIs enable insurers to:

  • Incorporate real-time data from IoT devices for precision pricing.
  • Perform instant employment or credit checks versus relying on applicant docs.
  • Automate tedious manual tasks to improve underwriter productivity.

The Human API allows insurers to access applicant health records from EHRs, pharmacies, labs and wearables. This leads to more accurate risk assessment and pricing.

Industry Impact:

  • Automated underwriting shrinks policy issuance from weeks to minutes.
  • 160% better loss ratios with comprehensive data versus traditional underwriting.
  • APIs generate over $100 million in cost savings for top insurers.
Metric Manual Underwriting API-Automated Underwriting
Decision turnaround time Days-weeks Minutes
Loss ratio 60-70% 40-50%
Policy issue rate 40-50% 80%+

API automation delivers major underwriting improvements

In addition to Human API, platforms like Jenesis provide purpose-built underwriting APIs.

This overview of high-impact API use cases makes it clear: APIs are pivotal to the future of insurance.

APIs empower insurers to meet rising digital demands, unlock innovation, improve operations, and deliver highly customized experiences. Companies that don‘t make APIs central to their technology roadmap risk falling behind.

To learn more about leading API solutions for insurance needs, browse providers across these use cases and others in our comprehensive directory. And reach out if you need help finding the right partners to drive your specific API and digital transformation initiatives:

Find Insurance API Vendors

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