API Insurance

API Development: A Framework to Overcome Integration Challenges

Transitioning from legacy to modern applications has become a priority for insurers of all sizes. As the digital ecosystem continues to shape up, the fact that cutting-edge technology offers a critical competitive edge is no revelation. Over the last few years, APIs (Application Programming Interfaces) in particular have become a key focus for insurers. As a gateway between systems, vendors, partners, and ecosystems, API’s game-changing connectivity has been harnessed for everything from simplifying claims processing to enhancing risk evaluation. Accordingly, insurers hoping to compete in today’s ever-connected digital world are embracing strategic APIs as essential and implementing API development best practices for successful API integration.

But, how should insurers approach API development and integration? What framework and best practices can they use to avoid missteps and bring about success to their API projects? Let’s take a look at one insurer’s API journey to find out.

Modernize API Integrations to advance business goals

Like many carriers, this particular multiline insurer had been undergoing an enterprise-wide digital transformation, with core modernization being a major pillar. After successfully overhauling their core legacy system, they pursued an API-based enterprise integration culture that could enable applications to be developed faster, scaled on-demand, and centrally managed. The goal? APIs that could connect to any system—not just their current one—and thus scale for the future.

To successfully reach their goal, the carrier developed a process based on the following three-step framework:

1. Identify which APIs are necessary for the business

Rather than rush the development of APIs, the insurer found that it was first important to assess and determine which APIs are most valuable. “Value” in this case is determined by two factors: (1) whether the API brings enterprise value (e.g. ROI, speed-to-market) and (2) how widely the API can be reused across applications.

As their goal was to build applications independent of any core system, the fact that their initial APIs could not be leveraged across systems required them to devote additional time and resources to properly remedy and rebuild the necessary APIs.

2. Develop processes for the full API development lifecycle

Before starting the actual development of APIs, the insurer established the processes, guidelines, best practices, and assets needed to support the project from beginning to end. This included:

  • Building a Center for Enablement (C4E) – Like a Center of Excellence (CoE), a C4E is a cross-functional team that drives the IT operating model shift, effectively promoting shorter delivery cycles and better adherence to best practices.
  • Setting up an API repository – A repository is a centralized location where all APIs are stored—even if no APIs currently exist, creating guidelines for the labeling and storing of the APIs
    ensures transparency moving forward in the lifecycle.
  • Defining measurable metrics of success – Pre-determining what to measure to assess project success is critical for recognizing progress and compensating for setbacks.
  • Building and communicating coding and DevOps standards – By ensuring high-quality code, insurers can avoid building APIs that require a rewrite, thus limiting duplicity of efforts.

Figure depicting API development best practices

After all of the above was established, the insurer focused on the core steps of API development, which included:

  • Working with a vendor partner to map out the experience, system, and process of the APIs – By mapping out the services/transactions that are most broadly necessary across applications, insurers can prioritize and build APIs with greater reusability and value.
  • Developing and performing QA on the APIs – Cross-referencing the coding and DevOps standards to verify the quality of the code and ensure the APIs function properly.
  • Clearly labeling and adding the APIs to the API repository – That way, when businesses develop applications in the future, they can simply check the repository to see if the service required for the application (e.g. check current status, make a payment, get an address) are already built.

3. Build enterprise-wide transparency and cultural alignment

Modernization is a huge undertaking and requires effort from the entire enterprise. This insurance carrier recognized this and involved every level of their business from the start. Understanding business leaders’ expectations and preventing misunderstanding in non-IT departments by cutting technical jargon was equally important. For this reason, the insurer built a communication plan that regularly updated the company on the current state of the project.

APIs set the stage for success in the digital world

Harnessing the potential of APIs is becoming a must for businesses across industries. As customers’ expectations for exceptional, seamless digital experiences continue to scale up, insurers’ ability to respond to these emerging demands—whether via partnerships in an ecosystem or technologies that boost time-to-market—must also step up. Speed matters in today’s marketplace; the three-step framework discussed above can help set the stage for not only a smoother API integration journey but also a stronger standing in the digital economy.

How are businesses across industries leveraging open APIs to take their business into the future? Find out how to elevate customer experiences, streamline data transmission, aggregate services, and more.