The insurance industry has always relied on external data, from life expectancy projections to the medical histories of individuals to be insured. Still, the process of obtaining that data hasn’t always been as straightforward as it should be, as anyone who has ever filled in lengthy forms about their medical history will tell you.

Insurance is one of those rare things we purchase hoping we’ll never actually have to use. Should the worst happen and you need to make a claim, filing can be confusing because it’s something that most of us rarely do. But maybe there’s a better way.

We’ve previously written about the potential of using APIs for streamlining the insurance industry and, in recent years, we’ve seen technological innovations in the insurtech space capable of modernizing everything from quoting and policy generation to claims processing.

In this post, we’ll delve into a few ways that insurance companies — including both established players and agile new additions to the scene — are relying on APIs to power this wave of innovation.

The Rise and Rise of Insurtech

Before discussing insurtech, it’s worth pointing out that this is still a very new space. Lemonade, Next, Hippo, and Newfront — a few major US-based insurtech companies that have already reached unicorn status — were all founded less than a decade ago.

The insurtech market, already valued at​​ more than $5 billion in 2022, is growing rapidly and is attracting investment all over the world. In many jurisdictions, there are initiatives in place to support its growth. Insurtech UK, for example, boasts over 100 partners and has signed a Joint Statement of Intent with the UK Government’s Department for International Trade.

While we’re seeing plenty of new companies looking to ride the insurtech wave, we’re also seeing established players turn to solutions like APIs to digitize their offerings, streamline workflows, and compete with those nimble players that have arrived on the scene. Take AXA, for example, which was ranked as the largest insurance provider based in Europe in 2023 (by net premiums written).

In 2017, AXA Singapore launched an insurance-as-a-service API designed to allow the embedding of personalized insurance products from AXA in third-party products. This was a response to the Monetary Authority of Singapore’s call for more open APIs to support innovation in the country’s fintech sector. And the company has continued to engage with APIs since then.

In Luxembourg, AXA worked with Mulesoft and Cap4 Lab to move away from custom code to an API platform to automate aspects of claim management, create a single customer view of policyholders, and accelerate the deployment of future integrations.

Notably, we’re seeing such a big player look to deconstruct its monolithic architecture and embrace the potential of APIs in both internal and external capacities. We should expect to see plenty more of that from others as the insurtech movement gathers steam.

A More Holistic View of Insurance Customers

While health and car insurance premiums are very likely to be impacted by claims related to medical emergencies or crashes, you’ve historically been unlikely to see a reduction due to increased physical exercise, better dietary habits or careful driving. But that’s all changing.

All sorts of health APIs are available in the UK and the US — the former’s NHS offers a range of APIs and integrations that can be used for the results of GP appointments through to death notifications, while the latter’s ONC’s (Office of the National Coordinator for Health Information Technology) Health IT Certification Criteria rule requires certified health IT providers to provide patient access to health information via APIs.

As APIs take a larger role in healthcare (perhaps a post for another day), there’s a ton of potential here for further adoption. But currently, in both of these cases, data can’t be shared with insurance companies without explicit patient consent due to confidentiality regulations.

In the meantime, some insurance providers are finding creative ways around this by partnering with third parties. The UK’s Vitality, for example, uses APIs from the likes of Fitbit and Garmin to measure heart rates and track the steps of their customers. When customers hit targets, they’re rewarded with discounted smart devices, gym memberships, and other perks.

On Vitality’s side, they can use that data to build up a picture of their customers’ health, keep an eye on declining physical output, and perhaps even predict the likelihood of future medical events. This bold approach would be impossible without third-party APIs.

From Real-Time Risk Assessment to Fraud Detection

Writing about usage-based car insurance, vehicle API provider Smartcar (whose offerings are already used by Uber, Turo, and Lyft) describes how APIs can be used for everything from incident notifications involving a policyholder’s vehicle through to predictive maintenance alerts about issues that could affect customers’ vehicles… and, presumably, their premiums.

Fraudulent claims have long been an issue for car insurance companies, with some customers intentionally crashing, exaggerating injuries, or faking damage to their vehicles in order to obtain a larger payout than they’re entitled to. All of which is more difficult with telematics insurance.

Telematics, also known as black box insurance, has been around in some form or another for a couple of decades but has developed rapidly in recent years. Rather than relying on janky GPS data or self-reported readings from the odometer — Bueller! — mileage data can now be pulled from some vehicles without the need to install additional hardware.

Just as Vitality uses APIs to monitor the health of its customers, car insurance providers can use them to measure the condition of the vehicles (and the behavior of their drivers) they’re covering. This form of dynamic risk assessment, which enables insurers to reward healthy habits and careful driving, offers a compelling future vision. But it has a dark side too.

Where good habits are rewarded, we must reasonably assume there’s an appetite to punish bad ones. The problem is that evasive maneuvers and elevated heart rates could easily be due to avoiding potholes or watching a scary movie rather than anything more sinister.

This really underscores the need for two things that stand in opposition to each other:

1. That insurers can pull in as much data as is required to get a clear picture of the context
2. That users understand how much data they’re sharing (and, if required, how to opt-out)

Data sovereignty is a hot topic in our space right now, and it’s an issue that will take some careful navigation in highly connected industries like insurtech, open banking, and so on. Insurers could, for example, find themselves in very hot water if they were to invalidate a policy based on information that they hadn’t obtained explicit permission to access.

The Future of Insurtech Looks Bright

APIs and other innovative tech are transforming insurance in various ways, from streamlining the process of making claims and purchasing policies to embedding insurance products within third-party products, from car hire agencies to travel companies.

Embedded insurance APIs like Cover Genius and Qover, for example, allow for the integration (and purchase) of insurance products within external services without the need to shop around. WeProov‘s API, meanwhile, offers an inspection solution that uses AI to identify damage, estimate repair costs, and create digital reports.

In the past, you might have waited for weeks to be deemed coverable (or not), receive a payout after a car accident, or make changes to an insurance policy. As APIs and automation shake up these processes, these tasks could now take days, hours, or maybe even minutes.

Take Human API, now LexisNexis Health Intelligence, which can be used to access health data from electronic health records (EHRs), medications from pharmacies, lab test results, and more. From an insurer’s standpoint, it can be plugged in to accelerate the process of underwriting policies and facilitate near-instant decisions regarding coverage.

What’s really interesting here is that, like in the UK’s digital banking industry, we’re seeing a mix of both disruptive new players making their debuts and the rapid adoption of new technology by incumbents. It’s an environment that fosters competition, which is often good for consumers.

As both parties try to out-innovate each other, we’re seeing outcomes like fairer pricing, niche microinsurance (e.g. for gig economy workers) companies, and greater transparency around policy management. Despite a few lingering concerns around the issues of data access and protection, there’s plenty to be optimistic about when it comes to the future of insurance.