To understand the impact of APIs on insurance, let’s first familiarise ourselves with the concept of API and how it has become a universal tool in its short lifespan.
In today’s segment, we will obtain a brief insight into the functioning of APIs and explore the many phases of evolution that it has undergone. This will help us realise the implications of APIs in the current insurance frame.
What is an API?
API stands for Application Programming Interface. It enables software systems or applications to establish communication amongst themselves. It’s made up of a cluster of codes and protocols that result in the integration of software.
The use of API is paramount as it saves them time and money that application developers would otherwise have to invest to obtain data on their own.
An example of API is food delivery apps using Google Maps API. Here, API functions as a virtual mediator that transfers mapping data from the Google Maps database to the food delivery app on a request or ‘API call.’
A rundown of the history of APIs
APIs have managed to build their presence in nearly every aspect of modern business in a small amount of time. It is accredited with bringing about a whole new era of interconnection and data sharing.
APIs entered the big picture with Roy Fielding’s dissertation Architectural Styles and the Design of Network-based Software Architectures in 2000. Salesforce introduced the first modern API on February 7th, 2000 at the IDG Demo conference. This was followed by the eBay API, launched on November 20th, 2000 and the Amazon.com Web Services, launched on July 16th, 2002.
APIs existed even before the Internet or WWW, however, their existence was in the form of small proprietary protocols over distributed computer networks. With APIs, data could be shared and customised as per use.
However, the main objective of API has always been to act as an access point between two applications.
Evolution of API
The commercialisation of web and APIs
The early 2000s era was dominated by the ability of the computer systems of software to be able to exchange and use information. Even then, it was very difficult to to make systems talk to one another.
This era was run by three industry giants – Salesforce, eBay and Amazon.
However, the data available was limited to the organisation’s reach as SOA (Service Oriented Architecture), which was the accepted model. The importance of syndicating valuable data was learned soon after.
The APIs developed by Salesforce, Amazon and other tech giants were based on the XML format which was considered the fundamental model for data-sharing at the time. XML was later standardised as SOAP.
The social era and APIs
APIs didn’t gain momentum until the social era. In the year 2004, with the launch of the prominent photo-sharing app – Flickr, the world of API experienced a major shift.
Within the next six months, Flickr came up with its very own API which enabled users to embed their images into the social network streams.
Fast forward to August 15th, 2006, Facebook came up with a development platform and API. Developers were now able to access Facebook data using the new Version 1.0 of the Facebook Development Platform.
Soon after, Twitter launched its API in September 2006. As of today, almost every known feature of Twitter uses APIs.
Whilst these events, Google was testing the API grounds in terms of embedded tools and apps. Due to the infestation of hackers over the recently formed Google Maps, the Google Maps API was introduced.
By 2010, powered by APIs, social media platforms like Facebook and Twitter were ruling all over. However, even then, APIs were not relied upon to operate a business.
API’s role in cloud and mobile
The introduction of Amazon Simple Storage (S3) and Amazon Elastic Compute (EC2) resulted in the biggest fundamental shift in the use of digital resources.
Amazon S3 provided a simple interface that could be used to store and retrieve any amount of data, at any time, from anywhere on the web. It was access to the same cost-effective data storage infrastructure used by Amazon.
Just like Amazon S3, Amazon EC2 was also a restful API.
APIs reached their peak with the launch of the iPhone 3G. The App Store gave birth to a new chapter of mobile applications with APIs in the backdrop. With the transition to mobile, APIs realised their full potential.
Role of API in insurance
API holds a critical role in the growth of the insurance industry. The customers are exposed to a pool of resources and platforms that have accustomed them to expect products and services that are nothing less than perfect. They demand an omnichannel presence from their insurance companies.
Gone are the days when monolithic databases governed the insurance sector. Today, with the incorporation of APIs in insurance, customer data is integrated and accessible.
According to research conducted by Celent in 2018, insurers that fail to build APIs into their platforms won’t be competitive in the next five years.
Insurance APIs connect various insurance technologies. APIs provide insurers with standard access to customer data with the use of applications and devices.
APIs have heavily benefited the insurance industry by increasing its efficiency, raising revenue figures, delivering excellent customer experience and growing personal channels.
The different applications of APIs in the current insurance scenario are listed below:
- Help agents access leads and easily obtain policy quotes at a single location
- Streamline interactions between the insurers and end customers by enabling communication through digital platforms
- Speed up the claims resolution process and increase efficiency in claims management
- Provide access to data enabling intelligent risk checking and reduced underwriting time
Thus, following the importance of APIs and their crucial presence in the future of business and commerce, the insurance sector should move in strides to implant APIs in the insurance industry with the objective of integrating data and achieving efficiency.
The future of APIs
GraphQL the upgrade to REST
While REST has been the common industry standard for APIs, GraphQL has been gaining heat by being more flexible and easier to use. One major benefit of it has been that it lets developers to query data from multiple applications and services through a single API. This is useful for Backends for frontends patterns as it helps companies aggregate data from multiple microservices and deliver it to a specific client.
We believe that more and more people will start using GraphQL in the near future.
Learn more here.
Growing focus on security
With every passing year we can see the impact of lack of security measures on even the biggest companies in the worlds. A cyber attack, damanges a company’s reputation, customer’s trust and most importantly, puts their customers in direct risk of fraud.
The primary attack surface (the number of possible ways an attacker can get into the device, software, etc) is not applicable anymore. APIs have become a frequent attract vector, risking data security.
most-frequent attack vector,
Therefore, it is clear to see the focus on securing APIs. To do that, it requires visibility across all applications. The fixed security measures wont be enough for companies as the companies themselves are becoming a lot more spread-out and open. With time, we believe a lot more companies will move toward models that prioritize layered defense based encryption and zero-trust, stronger authentication and authorization and application identity.