The number one challenge insurance companies face today is their ability to innovate at speed. The gap between market opportunities and insurers’ ability to launch products that address those opportunities is particularly difficult to close.
This is the word from Louw Hopley, co-founder and CEO of insurtech platform Root, who adds: “Much of this challenge is a result of the technical debt insurers have built up over many years, with inflexible processes baked into legacy IT systems.
“Insurers struggle to adapt their existing applications to meet the evolving needs of the market, often because these systems were never designed to support the pace of change consumers expect today.
“But,” says Hopley, “the integration layers that companies have built over the years to connect their various systems hold the key to leveraging modern, service-oriented platforms. Using these existing layers, they can increase their agility without significant investment in people and time to rip and replace their older systems.”
Insurtech providers have built platforms that take advantage of low-code APIs to provide flexibility to insurance companies. With these, insurers can accelerate product development without sacrificing the integrity of their existing systems, Hopley continues.
The key benefit of an API is the certainty it provides around the output of any given operation. This gives product teams a sound foundation for product development, which allows them the freedom to use their understanding of the market with no need for in-depth technical skills.
“Whether you’re an existing insurance company or a new entrant, an API-driven service enables you to quickly create new products without reinventing the wheel. However, the insurtech platform underlying the API must be flexible enough to meet your specific requirements. For example, some insurers process information in real-time and others still use batch processing,” comments Hopley. “All of these processes need to be accommodated on the insurtech platform you choose.”
He suggests insurers keep three things in mind when they consider how to approach innovation:
Data quality
Check that the insurtech platform the API will run on was designed with data quality at its core. That means the data that’s passed across to the systems can be used to fuel additional data-driven initiatives. With additional quality controls in place at the API level, the adage of “garbage in, garbage out” need not apply, Hopley says.
Let the code do the work
“Many companies try to build utility services which are common across the industry – such as sending policy documents to clients. When services are already available via a common platform that can easily be linked via API to their core systems, rather use these services instead of duplicating efforts,” he says.
Play nicely with middleware
Choose an insurtech platform that can work with your existing middleware and integration levels, Hopley says. “Low-code APIs make it easier to integrate with these critical interfaces because they ensure that the required information is always available.”
APIs may have been around almost as long as computers, but modern APIs enable organisations to reach beyond the limitations of their existing systems to connect with functionality that helps them keep pace with market innovation, concludes Hopley.