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Insurance As A Service
Ecommerce stores are embracing Insurance APIs. Here’s why.
Ecommerce stores are making more use of insurance APIs to improve customer experience and revenue generation. Find out why and how this is happening.
26 February 2020
APIs (short for Application Programming Interfaces) have made a significant impact on the way we build applications and connect with other businesses and digital assets. Use of ecommerce APIs in particular has expanded exponentially by taking advantage of these integrations. This is now also happening thanks to the use of insurance public APIs by ecommerce companies to improve customer experience and revenue.
Let’s say you have a retail website and want to include a map that prospective customers can use to drive to your store. You have two options.
Option 1: Build a fully-fledged mapping software, complete with real-time traffic updates, suggested alternate routes etc.
Option 2: Integrate Google Maps into your website.
Option 1 would be sheer madness.
Option 2 is called an API.
What is an API?
Think of an API as a language that software applications use to speak to each other and exchange data with.
In a similar way that English is accepted as the de facto language used to communicate with people irrespective of their native tongue, an API allows different IT systems or applications to communicate, exchange data and use each other’s functionalities, irrespective of the coding language used in building them.
When a company builds an API on top of its software application, it operates as a platform of sorts, sharing data and digital assets with other companies who in turn process and deliver a value proposition to users that might otherwise be out of reach. Looked at in this manner, the API is the go-between that allows the separate applications to communicate.
The company consuming (make use of) that API can also build its own applications on top of it, thereby contributing to the innovation cycle and adding even more value.
What is an Insurance API?
Largely driven by the industry itself, forward-thinking
have been actively developing APIs for the most common insurance features. Through these public APIs, ecommerce partners can trigger functions such as producing quotes, issuing policies and generating insurance documents from any website or mobile app without having to build the functionality themselves.
Insurance APIs give ecommerce customers access to insurance coverage directly at the point of sale.
Using a robust insurance public API, ecommerce sites give their customers access to insurance coverage specifically tailored for the product they are purchasing, directly at the point of sale.
With a single click, shoppers can
add the most appropriate coverage
to their shopping cart which
generates more revenue
for the seller and a better experience for the customer through related services.
With such a win-win proposition, it’s easy to why insurance APIs have become a natural avenue to explore for both insurance companies and online sellers.
What is driving use cases of Insurance Public APIs?
An industry that could not respond to the needs of its customers
Conventionally slow to innovate, over the course of history, incumbent insurance companies became entangled in a web of large central databases, inward focused processes, and core systems that were unable to communicate with and serve the dynamic needs of the outside world.
As market trends and consumer behaviour changed, this isolationist approach meant that many of these systems were now hindering growth opportunities and the ability to reach customers at the most critical touch-points such as points-of-sale and online shopping carts.
Together with increasing acquisition costs and competition from disruptive start-ups who were not held back by legacy systems, incumbents needed a new approach.
Insurance APIs provided the perfect opportunity
Fortunately, many progressive and innovative insurance companies eventually came to the realisation that pushing commoditised non-flexible products and services through traditional intermediary networks will simply not cut it anymore.
They could no longer wait for customers to show up at their doorstep.
They needed to be present at more touchpoints, with products and services that were flexible and context-specific.
They needed to make their systems more accessible, more open.
They needed to embrace a culture of innovation, rather than one of confidentiality.
In other words, they needed to re-design their distribution strategy with a primary focus on customer centricity and open innovation.
A typical insurance API use case in ecommerce
Imagine a customer buying an expensive camera or laptop from your ecommerce website. Imagine they also want to insure it for damage or theft.
Normally they would buy the item and then have to search online for a suitable cover.
Now imagine if the most suitable cover was made available to them through your ecommerce site at checkout. No need for additional research or visiting multiple insurance websites.
Through a single opt-in button and a seamless payment process, the customer can purchase both the camera and the insurance cover in a single transaction.
In the background a policy was created in the insurer’s back-end systems and the required documentation generated and sent to the customer.
All this is achieved instantly, in real-time, with no disruption to the customer experience and without leaving the ecommerce site.
Moreover, as an ecommerce store you have generated additional revenue over and above the sale of the core item; not to mention delighting your customers with a more comprehensive offering.
The above is a very typical albeit basic representation of how an ecommerce site can make use of an insurance API. But the
advantages from this simple example
are quite evident.
At PSA Insurance Solutions, our Digital Team, in collaboration with ecommerce partners from various sectors, have identified other use cases and built the respective solutions.
One example, is a business loss insurance used by online and offline tyre retailers and wholesalers across multiple EU countries. In this scenario, customers purchasing new tyres can also opt for a tyre insurance at the physical point of sale or within the online shopping cart.
Why use an ecommerce insurance API?
Consuming a public API from a
reputable insurance company
as part of your ecommerce offering presents
multiple business and product opportunities.
To start with, you have tremendous cost-efficiencies. You are making use of a technology that was built and paid for by the insurance company and tested by various other operators.
Using an ecommerce insurance API can serve multiple purposes and opportunities.
The insurance company would have used this
user feedback to iteratively improve
the API and allow all its partners to take advantage of these improvements.
An insurance company, especially one that has been around for a long time, is fully immersed in that industry. It is compliant with the latest legal requirements, can generate and maintain the necessary localised documentation, receive and manage claims and enquiries, and more. In other words, the ecommerce company and its insurance partner can
leverage and exploit each other’s capabilities
An API allows you to quickly and efficiently introduce
new products and augmented offers without disrupting your systems
and with minimal impact on your own technology roadmap.
Insurance APIs open the world to new revenue streams
Insurance companies need to deliver high-value context-sensitive personalised products through multiple channels using frictionless experiences.
And as the boundaries of the insurance ecosystem continue to expand through non-traditional partners such as connected vehicles, smart home manufactures and wearable devices makers, today’s ecommerce companies stand to benefit immediately from partnering with insurance companies making heavy API investments.
Such insurance partners bring not only decades of experience in developing insurance products with solid back-end processes, but are also opening their technology platforms so you add more revenue streams and deliver great customer experiences.
If you want to know more about how you can increase the revenue of your digital business by offering add-on insurance using state-of-the-art API technology, please
directly or book a time for us to call you, its free and there are no strings attached.
We will be happy to contact you at a time that suits you, for a free, no-obligation consultation.
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