Written by Esben Toftdahl Nielsen, co-founder at Penni.io. Editorial review by Fouad Husseini.

Digital innovation has revolutionized many aspects of business, creating a level playing field by reducing distance and allowing us to move in real time. One of the most important elements of this evolution is represented by e-commerce.

Application Programming Interfaces (APIs) is a key digital tool that enables businesses of differing pedigree and size to collaborate digitally. In many cases, APIs are instrumental in speeding up the adoption of a new product, by moving past the Early Adopters stage and into majority adoption more quickly.

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Over the past several years, investors have poured billions of dollars into InsurTech startups. It seems like every week there is a new company claiming to have revolutionized insurance. And yet, not much has changed in the insurance market. While these new digital insurance offerings have their early adopters, most people and companies have not moved on from traditional insurance products and old-fashioned ways of selling and purchasing insurance.

One of the major reasons for this is the underappreciated role of APIs. In fact, a survey of more than 2,000 participants found that, while C-suite executives do recognize the impact APIs have on business, they underestimate its role in comparison to AI and IoT technologies.

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Related reading, on what the Insurance industry can learn from Open Banking and PSD2 regulations in Banking: Key lessons for the insurance industry from Open Banking.

Moving away from product-centric partnerships

Many of today’s incumbents have a product-centric view of distribution partnerships. Sales workflows are not designed with the (online) end-customer in mind, but instead focused on the insurance company’s offline sales processes.

This is no longer tenable for two reasons.

First, we have seen a clear shift in consumer expectations. Rather than being content with whatever their insurers have to offer and how they want to sell it, consumers now demand greater added value throughout the entire buying process and the convenience to purchase insurance products digitally.

Second, there is a diminishing number of distributors worth partnering with. Leading insurers are quickly securing the best distribution deals, leaving their slow-moving competitors with fewer and fewer options. Speed-to-market is now key for any incumbent who hopes to win in this new era, but many are still lagging.

 Bridging the gap in digital distribution

While distribution partners want to sell insurance and want to add insurance cross-selling to their existing online customer journey, few insurers are able to make this happen. This creates a gap in their partnerships.

Part of the problem is structural: many incumbents are burdened by legacy systems that prevent them from offering digital cross-selling opportunities. The partnering companies struggle when it comes to converging their digital ecosystems, something that could be facilitated by APIs.

However, the problem is also due to entrenched cultures at many insurance companies. Insurers generally, tend to have little experience of online sales or how to facilitate them through distribution partners.

To succeed, these partnerships require digital infrastructure and support. At Penni.io, we’ve developed a solution to bridge this gap and help incumbents meet the expectations and needs of their distribution partners. The Penni Connect platform provides insurers and brokers with API solutions to facilitate online sales through distribution partners and help incumbents remain competitive in the digital space.

Implementing APIs without overhauling core systems

Not everyone in the insurance industry is familiar with APIs, but the concept is quite simple.

APIs are a way to exchange information digitally. For distribution partners, having an API means being able to retrieve basic information about the product in real-time (such as the price and deductibles). This feature is essential for cross-selling insurance products online.

Related reading, on what APIs are and why we need them: What are APIs and why do we need them.

For many insurers, implementing APIs seems daunting. Digitizing their offerings and processes would mean overhauling their entire core system and perhaps changing the way they conduct business.

Insurers can take an incremental approach instead by digitizing only a limited range of insurance products. They can also focus on the certain steps in the customer journey where digital support is most important (typically, getting a quote to the customer in real-time) while keeping the rest of their sales process intact.

Partners should also be thought of as your API consumers-in-waiting. Creating meaningful developer experience (DX) is just as important as the product, in fact APIs are now thought of in the context of products and are designed accordingly.

Choosing a developer-first experience will increasingly become a competitive edge among developers and decision makers evaluating different competing APIs.

Software developers will play a larger role

C-level executives overwhelmingly acknowledge that developers help their companies in critical ways. The best developers build new products, services, and entire businesses. Collectively, developers have the ability to raise global GDP by US$3 trillion over the next 10 years.

Cross-selling insurance products is increasingly part of meeting customer demand, but the industry has been slow to do it in a way that is efficient and effective. The days when companies could lag behind is coming to an end, however. Digital insurance distribution and the APIs that support them are quickly become an essential aspect of doing business for insurers.

That trend will only continue and accelerate. But the good news is that it’s not too late to adapt. Insurers and brokers still have the opportunity to include APIs as a point of discussion on their strategic agenda.

That window, however, is quickly closing. Don’t miss out. Take steps now to implement APIs and remain competitive in today’s digital ecosystems.

About author

Esben Toftdahl Nielsen is the co-founder of Penni.io, a company that has built a platform to smoothly implement digital distribution for insurers and brokers – including companies still operating on legacy systems. By using their insurance-API platform, they allow insurers to offer digital sales in real-time while keeping their existing core systems intact.