Insurance APIs 101: Application Programming Interfaces and How They Benefit the Industry

This post is part of a series sponsored by AgentSync.

Insurance is full of fun acronyms. So full, in fact, that we’ve written multiple pieces like this one and this one to try and cover as many as possible. While those articles will give you more context on things like NPNs, the NAIC, or P&C, in this article we’re discussing a newer kid on the insurance acronym block: APIs.

While not limited to the insurance sector, APIs are becoming more popular among insurance and insurtech organizations, and for good reason! So, without further ado, let’s dive in to a discussion about APIs including what they are and why they matter in insurance.

What is an API?

While it may feel like just the latest buzzword being tossed around by tech companies, APIs are more than a passing trend. API, which stands for application programming interface, refers to an intermediary layer of software that enables two different systems to transfer data seamlessly between them.

To simplify, APIs help applications to talk to each other. While there are different API structures (which we’ll get into shortly), the end goal of each is to give organizations a more accessible and standardized way to share data both internally and externally.

How do APIs work?

To understand how an API works without getting caught up in a bunch of tech bro mumbo jumbo, let’s walk through a scenario you’ve probably found yourself in before: calling an Uber.

When you use a ridesharing app to request transportation, you are interacting with an API. The Uber app connects to the internet and sends data like your current location and your preferred destination to a server. That server retrieves the data, interprets it, and then sends relevant data back to the app. The app then interprets this new data and presents it back to you in a way you can understand, like by giving you the cost and estimated time of arrival for your ride.

The API comes into play as soon as you open the request for a ride. Your request for a last-minute Uber to the airport is sent to the API, which retrieves data like current traffic conditions, available drivers, and fastest routes and returns it to you in a way that makes it clear to you that you’re going to miss your flight.

What are the different types of APIs?

APIs can be split into several different “types” depending on how you categorize them. One common way to differentiate APIs is by their intended audience, in which case we can separate them like this:

Public APIs: Also called external or open APIs, public APIs are available to developers and users with little to no restrictions. Think about the Uber example.
Private APIs: Also known as internal APIs, private APIs are hidden from external users and the organizations that build and maintain them don’t share them for outside consumption. Private APIs face more restrictions and only authorized individuals can access them.
Partner APIs: Partner APIs are a happy medium, which a business builds and maintains for its own use and that of its strategic business partners. Users need specific authorization to access partner APIS, and they aren’t available for the public.

Another common way to categorize APIs is by their structure. You may have heard of two of the most common API structures, SOAP and REST; not to be mistaken for an extremely simplified self-care routine.

What are SOAP APIs?

The simple object access protocol, better known as SOAP, is an API structure type that supports complex data exchanges. The SOAP structure is like the founding father of API structures. It’s older, more established, more clearly defined, and more tightly controlled than other architectures.

One of the main differences between SOAP and REST is that SOAP APIs only allow data to be exchanged via an XML format.

A quick note on data formats

Data formats are rules for structuring data so that it can be stored or shared across different networks and databases. The data format dictates preset specifications for how developers must organize data.

Two common messaging formats are JSON, or JavaScript object notation, and XML, or extensible markup language. XML offers a complex, but free-form ability to structure your data, and is used in all sorts of different technologies. JSON is a simpler format, in comparison, but has become the lingua franca of REST APIs.

SOAP was one of the first standardized API formats on the scene, and has successfully been used in complex data exchanges. However, its stricter rules and lower flexibility have led to its popularity decrease in comparison to other API types.

What are REST APIs?

American computer scientist Roy Fielding developed the representational state transfer architecture, more commonly known as REST or RESTful, as another approach to building APIs. Its flexibility and ability to deliver data via XML, JSON, and other messaging formats, has cemented the REST structure as an alternative to the limitations of SOAP.

REST APIs have a rich ecosystem of software tooling allowing them to be easily accessed from popular programming languages, like Java, C#, Javascript, and more. The modern tooling available for REST APIs makes them a popular choice for low-cost, high-reward software.

REST APIs are commonly documented in the OpenAPI format, meaning developers can easily determine exactly how they work and what they do. For example, anyone (with the technical know-how) can look at AgentSync’s ProducerSync API documentation and determine how to use it.

Overall, the main draw of REST APIs is just how scalable and flexible they are. Developers can quickly and easily integrate REST APIs with their pre-existing softwares without a whole lot of added work.

Why do APIs matter in insurance?

It’s possible you clicked on this article simply because you were curious about APIs, in which case I hope you’re finding it helpful. However, it’s more likely you’re here to learn why APIs matter, and more specifically why they matter in the insurance industry.

Speaking broadly, industries across the board leverage APIs for digital transformation. Incorporating APIs into business operations can:

Improve the customer experience by increasing efficiency and allowing for greater personalization in an organization’s products and services
Decrease manual work, saving employees valuable time and effort
Save costs and downtime by eliminating the need to develop and/or integrate applications from scratch

Insurance carriers and agencies have several good use-cases for APIs, from compliance data to claims processing, payment processing, and background checks. When it comes to insurance, having up-to-date producer licensing and onboarding data at the point of action is a must. By leveraging APIs, carriers, agencies, and MGAs can access current data when and where they need it.

API integrations are particularly beneficial to insurance organizations that already have a robust, highly integrated tech stack in place. For example, legacy carriers with bespoke systems might be reluctant to add another layer of fully developed software, like a standalone compliance solution, into their tech stack. Instead, it may be more efficient and cost-effective to thread API data through their existing systems.

Humanize your data with AgentSync’s ProducerSync API

AgentSync’s ProducerSync API is a REST API that provides access to more than 200 data points, including producer licensing, carrier appointments, and adjuster licensing. With accurate, easy-to-understand data delivered straight into your existing systems, your teams can cut hours of research and guesswork from their workflows.

Ready to start leveraging APIs for faster speed-to-revenue, more efficient compliance teams, and lower business risk? Contact AgentSync today.