Digital insurance marketplaces are becoming alternative distribution channels for insurance products. We are all familiar with Orbitz, Kayak, Hotel.com and other sites for our travel and hotel needs.
In the insurance industry, there are a few digital marketplaces where one can now get commercial insurance from more than one insurance company based on a single request. These new digital marketplaces or alternative distribution channels are gaining ground in the insurance industry as they offer the agents a more customer-centric and speedy solution.
If an insurer wants to join these new digital marketplaces for any line of business, there are only two options available in today’s technological landscape.
As I outlined in the previous blog article “What Are Digital Ecosystems and Why You Need One,” APIs or Application Programming Interfaces are used to connect frequently updated content from various sources across the internet to develop a digital marketplace.
RPA or Robotic Process Automation is another option that has received some news coverage.
Using the Kayak aggregator website as an example, let’s take a step back and compare how using APIs versus RPA would work.
Does the service provider have an API? All airlines and hotels have APIs. Given the origin, destination, travel dates, and class (economy/business, etc.) these APIs return the fare within milliseconds, making it easy for Kayak to invoke these APIs, calculate different route options and show the price to us from 100’s of airlines within 30 seconds.
Now imagine, if these airlines did not provide an API’s. Imagine the only way to get an airfare from an airline would be to log into the airline website, enter the travel dates, enter the origin, destination, class and search to get the airfare.
Without APIs, Kayak would then have to use what is called an RPA (Robotic Process Automation). Kayak would have to simulate an end user by logging into the airline, entering the origin, destination, travel dates and get the results.
Kayak would then have to scrub the result, get the price from the HTML and use it for internal processing. Doing this for each airline would take about 30 seconds or more per airline and getting the results would take much longer for the end user.
Unfortunately, this is where we are in the insurance industry. Barring tier 1 carriers, most insurance companies DO NOT offer connectivity via APIs.
What this means is the digital marketplaces would have to simulate the end user or insurance agent by entering the data manually into each insurance company’s website (agent portal), scrub the results and get the quote back.
We recently implemented both RPA and API for a commercial insurance quote for one of our clients. Not surprisingly, the API took 10 seconds. In 10 seconds, we could get a commercial quote by passing the required details. The RPA process took more than 6 minutes, sometimes almost 10. For the agent or the end user, the choice is clear. Will they wait an additional 10 minutes, or will they move on?
In our experience not only was the quote response faster but the time it took to integrate an RPA solution took much longer. For carriers that did not have APIs, we implemented an RPA solution, and that took 4 months versus the 4 weeks it took us to integrate with Carriers that had APIs.
An RPA solution has to be custom built for each distribution channel or each project. On the other hand, an API once created can be repurposed and shared with multiple business partners and across various distribution channels.
For insurance companies, the choice of using APIs is clear. To compete in today’s world, you need to provide APIs to your partners or risk losing out to the big national players with deep pockets. The challenge for insurers is the time it takes time to build an API that is scalable and secure.
There are hundreds of products in the market today that can help you create APIs. Choosing the right product and the right team can be the difference between 3 months and 18 months and several hundred thousand dollars in expenses and even more in lost revenue.
Did you know Leonardo Da Vinci had the idea of helicopters in the 15th century but did not have the right tools to build it back then? Steve Jobs thought of the iPad in the last century but had to wait until 2010 to build it.
You can hire the smartest engineers and architects today to create your APIs, but without the proper tools, the development of scalable and secure API’s can quickly become a time-consuming and expensive venture.