What Drives Digital Transformation in an Open Insurance Framework? – Part 1

Written by Emmelyn Wang, API Strategist at Axway.

This three-part series, describes three characteristics of a potential Open Insurance framework and how open APIs could transform the business ecosystem. These characteristics are grouped under, Availability, Experience and Results and henceforth, they are individually examined to provide a broad understanding of how they cause open APIs to flourish. In the process, our aim is to vet strategies insurance companies, InsurTech startups, and other ecosystem partners use to supercharge innovation powered by open APIs in their business practice.

The first part in the series tackles the key tenets of Availability and why they are crucial in balancing a business model that has little empathy with the demands of end users who desire it.

Let’s unpack Availability. Technically, high availability and software license agreements may come to mind. From a business standpoint, open APIs also require a level of quality that leaders have to be willing to invest in producing the right resources to support this level of provider expectation. Using an Outside-In approach and truly focusing on who will be consuming and relying on the API is key to availability for critical audiences.

From a discoverability standpoint, making the open API easy to find requires orchestration among product leaders, internal communication professionals, digital marketers and SEO experts, as well as a smooth onboarding and support experience. In addition, availability comes in the form of feedback loops so that improvements make their way out of the API provider’s organization back to the API consumer to make developers lives easier.

Product teams can come under immense pressure to deliver quickly to the market. So, the faster internal and third parties are able to find, design, build, and consume open APIs, the more likely adoption will fuel product growth strategically.

 

Availability: Reliability

When enterprise architects and developers find your API, they want to know how reliable it is and the expected life cycle as part of being available.

• Why should they invest the time to integrate using your API?
• Is it broad or granular enough to support the end application?
• How responsive is the support system and what channels are dedicated to their success?

 

Availability: Peer Reviews and Trust

In fact, developers and architects care quite a bit about the following aspects as deciding factors of API adoption:

• what their peers use
• what their peers are doing
• what trouble to avoid

So, strategically speaking, just as labeling a product “organic” has standards around it when it comes to food labeling, so it follows that open APIs should by default be designed to encompass a trust factor. Contributing to the OPIN initiative helps connect open APIs and insurance innovation towards this ideal state.

Incumbents, InsurTech, and the insurance ecosystem now decide how they partner with the likes of global tech giants that house quite a bit of data about their customers’ health and related patterns, devices and behavioral patterns at home, at work, and while driving from mobile phones, tables, and other continuous streams of data. How do insurance players strategically respond and proactively plan to this exponentially overwhelming availability of data?

API availability drives platform adoption and plays a part in the business portion of the API economy.  Often time, end users filter apps by rating. Higher app store ratings make it easy for people to understand that your app is used and well received. App stores use algorithms to make recommendations based on app usage. APIs that power these apps contribute to crash rate analytics. When apps have strong performance (powered by APIs) and end users can achieve what they are trying to do, they may be compelled to engage more deeply with the business by going to the desktop and full-featured version of the offering, and of course rely on the mobile app to communicate and use insurance services.

DB Schenker, a supply chain management and logistics enterprise, keeps its shipping data delivering critical timely updates with 99.99% availability so that their ecosystem reaches messages in real time to exceed customer expectations. An integration specialist at Erste Group Bank says, “We not only want to expose APIs to our partners in a fast and effective way, but we also want to do so securely…”

Hackathons are a great way to demonstrate how available your open API is or could be. You’ll get immediate access to a user base trying to make their first API call after signing up to your platform.

Types of Availability and How they Work

➔    Open Access

➔    Self-service

For most industries, open access availability is difficult to manage and presents issues. Public entities, government agencies, education institutions, healthcare, pharmaceutical, and anyone with customer or company data will need to meet the standards and legal requirements of data privacy and protection.

ACCOS, the French federal agency responsible for managing its citizens social security numbers complies with Open Data regulations and collected €500 billion annually with high levels of security, protecting data and providing a peace of mind to contributors. ACCOS also delights contributors with innovative new value-added services that contribute to national insurance funds.

Open access APIs can benefit if some of the non-sensitive documentation is available so that search engines can crawl and index. Though U.S. Open Data is a project that concluded, Data USA demonstrates how organizational adoption and influence is required to keep data sources secure and vetted even though it is open access.

In another example, from a payments perspective, when a natural disaster strikes and a family loses its home, what matters is that they access their insurance services in whatever analog or physical fashion helps them in their time of need. Often the local authorities need the help of telecoms and financial services to properly coordinate. This experience is where open APIs integrated properly among various parties could quickly and securely deliver.

Self-service APIs on the other hand are typically limited in scope and are truly designed as API first in nature. The language used in the descriptions and reference documentation are friendly for third parties to understand. Self-service availability means that the specification is easily found, public (even if access is not), and designed to require the least amount of support from the API provider as technically possible. In reality, we know that it is very difficult to achieve self-service. So, balancing and anticipating expectations when designing the API, onboarding, and engagement in well-defined channels is your best bet.

Relating this back to insurance, my experience is primarily for North America. What we are seeing is that incumbent insurance providers have a core foundation required by law that InsurTechs have to consider. Phenomenal design and experience or self-service for consumers can be convincing, but the complexity of the insurance ecosystem may prevent consumers from choosing care plans. For example, people who may love the Oscar Health platform can’t become customers, simply because coverage is unavailable in their local area. Or if their area does have Oscar Health coverage, the cost may be exorbitant making it an unreasonable option. In addition, we’re seeing that it is still very difficult for developers to find APIs that access healthcare, pharmaceutical companies, pharmacies and general access to the insurance ecosystem. The goal is for there to be insurance related open APIs that readily serve that industry as what we’ve been seeing in the financial services and telecom industries.

Achieving availability of the API specification, self-service onboarding, support channels and ultimately the insurance service itself is one of the key steps for transformation. Just like delightfully finding a Many geolocation and recommendation-based apps are now providing traffic and consumer patterns to healthcare and insurance companies to help with prescription and healthcare choices. Making it easy for freelance and independent developers as well as enterprise developers to understand what your API does and how to use it from their perspective will make availability the best strategy for API adoption. The adoption metrics typically help influence business buy-in for continued open API program support. Here are some examples of KPIs that we often see:

1. Simple Formulas - What percentage of your business is powered by APIs?
2. Social Proof - See how APIs power your business and the sentiment it changes
3. Trust seals & ratings - If a service goes down, the upstream and downstream effects are costly.

Innovative Shifts

The availability of your API:

• Fosters tight feedback loops and builds trust
• Captures more transactions on your platform
• Translates into faster expansion capabilities into other markets

For a moment, no matter what role you play in shaping APIs, try on the shoes and put on the hat of an API Product Leader. Product leaders can work closely across teams to show the value of APIs in action with examples from this article. Designing open APIs requires the art of influence and the science of data to show what value adoption brings to the organization. The strategy here is how Product Leaders work tirelessly to build a phenomenal insurance experience where availability is a key consideration. Open APIs are critical for internal innovation and designing APIs from the outside-in.

The larger vision is vetting ways to pull together digital and analog solutions to better how we live. We constantly look to countries like Finland and Singapore for the creative ways they improve the lives of their citizens. We learn from their implementation through their digital twin model. Studying the culture for each country that fuels digital and business innovation helps us adjust our own.  An insurance provider with access to digital twin city data and other viable civic data where physical and citizen data is verified and securely connects the dots for pattern recognition, predictions and to make recommendations to the ecosystem of insurance providers. Serving the insured becomes more lucrative and efficient, driving the investments of the insurance model.

 

Availability: Aggregation and Integration

API aggregators, such as GoodRx, understand the power of APIs in Action. Aggregators produce API products that are narrow in scope to prove success to an audience and keep them coming back. In this example, they focus on prescription drug prices and discounts in the US. However, consider this, an equally small company, Event Dynamic, focuses only on their pricing engine for any kind of dynamic ticket pricing. Though the pricing engine is for a different market, audiences can leverage the same kind of automation approach for the pharmaceutical industry.

 

Availability: Digital identity

GoodRx could be a great partner to health insurance carriers and Medicaid because it promotes price conscious behavior in users and proactive ways of managing their healthcare possibly easing the burden on insurance processing. In addition, the easier it is to search and compare options, the faster InsurTechs, insurance carriers, agencies and people can solve complex healthcare issues. Finally, offering open APIs means that insurance carriers and insurance ecosystem players are meeting users in the same context they are already in whether it is a website or mobile app. Availability within the frame of reference is really key to keeping the audience’s attention.

An increasing number of insurance companies are making API specification(s), (a) developer portal(s), and/or GitHub contributions available to the developer community. And if these entry points aren’t available or open, they must have a way to publish, discover, measure and innovate internally. In fact, the true test of an open insurance framework is how quickly the employees of a company can innovate internally. Once capabilities are maturing, then, you can work with several trusted circles before opening up the API program and product to external parties. Also, having champions to empathize with external integrators is key to gaining adoption.

Insurance carriers are quickly understanding that they are also technology providers since that is one of the main conduits to providing great insurance products. The proportion of resources including talent, technology, and leadership that an organization or company invested in its API program, developer experience, and hybrid integration plus API strategy directly relates to the provider's brand recognition and leadership position in the insurance ecosystem they represent.

In the world of insurance, and business in general, faster processing of diverse data translates into better service, more insight, and faster tailoring of offerings to move investments and assets. The approach of each provider reveals how much each organization and their leaders believe in the power of APIs. Standards are also a major reason why an open insurance framework can unlock workflows across disparate systems and more quickly create value. Here are real world examples of what that would look like.

 

Making the API Specification Available

The trade credit insurance company, Euler Hermes, makes the API spec for their REST API available in YAML and JSON format. Apply a usability test, how easy is it for a developer to get to your specification from your home website to your developer portal and to the open API file? Can they find it within 3 clicks or less than a minute? Providing the specification also reduces support tickets and increases satisfaction in the onboarding process.

Product leaders can show the business value of this by immediately pulling the specification into their favorite tool, and with the API key, making sample API calls to better understand what the API does-especially if no documentation is yet available in a beta phase. A product manager can then better equip quality assurance and documentation engineers by describing how the specification enables automation for API tools and provides a great experience for the humans consuming it. Now you can also develop the API through mock data as well.

 

Making the Developer Portal Available

Many enterprise companies don’t want to invest in a living developer portal because they can’t get the means to create a self-sustaining API program. Here is the case for why open APIs, made available in a developer portal that includes vetting who can access the API, supports an open insurance framework that makes the ecosystem more powerful for business justification.

Many developer portals may have a public URL, but you can’t see what the API offers or why developers should register or sign in. There’s an ongoing debate that even showing what APIs are available, product documentation, and anything else is a risk since competitors can see it. However, if you don’t publish it, you lose out on the organic search results that great content provides. Based on the many now defunct API directories, it is very difficult for developers to find APIs and the more difficult it is to find an API, the more likely no one will consume it. To promote the API, having a developer portal that is targeted towards adoption is key for an open insurance framework.

 

Example developer portals and API programs

1. Typeform

Though this API and its corresponding portal is not specific to insurance, the program is an exemplar based on how it clearly explains what the API does and how to achieve the value of using forms.

1. Athena Health

This API portal is a great example of one that conveys insurance ecosystem reinforcing engagement. Though the portal is about APIs they make it friendly for non-technical audiences to interact.

1. Liberty Mutual

Launched in 2017, providers such as Liberty Mutual don’t compete on price, but they do focus on quality of the insurance product. Customers often get stuck on the cost of coverage since they view insurance carriers like being an utility vendor, what differentiates your offering? Liberty Mutual targets university graduate/alumni programs and existing communities to leverage those ties.

1. All State’s Arity

Arity tries out an API driven strategy focused on analytics. Arity is a platform that assesses risk using telematics data and is packaged as products that they sell to automakers and ride-share companies. The idea is to use Uber and Lyft’s platform strategy to help insurers better manage pricing of policies using data.

1. BlueCross Blue Shield’s PlanConnexion

At the time of writing, the developer portal does not provide much information unless a user registers or signs up. This approach is by design. However, should BCBS decide to show some descriptive text without any sensitive information, then it will be easier for third parties, customers, and partners wanting to find their API to do so.

 

Summary and call to action

What will scale and drive innovation in your organization? Fostering awareness is the best way to properly promote what value your open API brings. Insurance companies, InsurTechs, and roles in the ecosystem bold enough to embrace open APIs realize that managing reputational risk with the security and governance inherent in API management and as a culture are key. Making APIs, particularly open APIs available make innovation and digital transformational possible with an Outside In view that must be accessible Inside Out.

APIs leverage emerging technologies making the data available to platforms so that timely and intelligent decisions can be made. For example, instead of having an insurance surveyor risk falling from a roof during an inspection, now insurance companies leverage drones to complete roofing evaluations. A platform approach makes the information accessible and can be accessed using open APIs.

People don’t want to accept the status quo. Insurance companies have this awareness and want to know where to start. APIs unlock siloed systems.  Insurance leaders who approach open APIs as a way to fuel secure innovation and facilitate automation in a governance model benefit through attracting new customers, boosting customer retention, draw in the best talent to build the insurance ecosystem, and strengthen your brand. Availability means addressing all aspects of how the insurance carrier makes their API and therefore their services available.