Why brokers say APIs must reach critical mass

For the long-sought application programming interface (API) tech solution to truly benefit the P&C insurance process, brokers stress, it’s important to reach critical mass.

Without that, APIs wind up being just one more of many solutions brokers must incorporate into their processes.

“Brokers deal with multiple carriers,” said grtr Consulting president Tom Reid, the broker connectivity lead for IBAC’s D/X Project and member of the Centre for Study of Insurance Operations’ (CSIO) INNOTECH Advisory Committee. “Say they’ve got eight carriers: they’ve got at least eight different portals, eight different processes.

“Now a forward-thinking carrier comes along with an API process. It might be better, but it’s new and doesn’t fit with my current setup. I say, ‘Here’s my process, but I have to do a separate thing for awhile [for API solutions].

“That’s where critical mass comes into play. You need enough carriers working with your vendor…so that the broker can change the whole core process. One or two carriers [using API solutions] is not enough.”

Until critical mass hits, brokers must wrestle with the inefficiencies flowing from using individual company web portals.

In some ways, insurers implementing Guidewire “is to our detriment as brokers,” said CSIO board member Steve Earle, president of Bauld Insurance. “Because Guidewire means smaller carriers that didn’t have portals before can now roll them out. So, we’re actually getting more portals…which creates more inefficiencies.”

Michael Loeters, ProLink’s senior vice president of commercial insurance and risk management, said this is bound to happen while carriers are replacing their legacy systems with Guidewire solutions and introducing API JSON (JavaScript Object Notation) connectivity.

“I hate portals too, but until you can give our insurer partners another option, they are going to use portals,” he said. “Henry Ford once said that if you asked people what they wanted, they would say they want a faster horse.

“It’s like that with brokers and technology. Brokers think they need a faster horse. Until you show them a car…and how a car is going to revolutionize the way they do things, they’re never going to ask for a car.”

Brokers also cautioned any move to an API-type solution will not happen like a light switching on. To date, the foundational work of creating API security and data standards has occurred mostly behind the scenes.

Three to five years from now, brokers may start to notice they can do things with their insurance carriers they couldn’t do before. Some will need to wait for long-term contracts with tech vendors to expire before renewing with vendors who can provide API tech solutions. And insurers are still replacing legacy systems with more up-to-date technology.

But brokers are excited about the future.

“When I started working with IBAC a couple of years ago…it took me six months to wrap my hands around [the connectivity issue]. Given the extent of the problem, I wasn’t thrilled, because there are so many hurdles. But a lot of things have changed in the last couple of years,” said Mathieu Brunet, a CSIO board member, vice president of MP2B Assurance, and a member of IBAC’s executive committee.

“And so, yeah, I’m optimistic.”

 

This article is excerpted from on that appeared in the February-March edition of Canadian Underwriter. Feature image by iStock.com/rudall30