How much time and effort brokers could save with API connectivity

Adopting an Application Programming Interface (API) solution for broker-carrier connectivity will significantly reduce errors and save brokers between 11% and 17% of effort during the quoting process, according to a white paper released Tuesday by Insurance Brokers Association of Canada (IBAC).

In personal lines quoting, a test of API performance suggested a “significantly increase[d] accuracy of quoting,” the IBAC white paper found.

When studying a non-API method of broker-carrier connectivity, “slightly more than [one third] of quotes provided were more than 2% different than the premium calculated through the carrier portal,” IBAC white paper concludes.

Reduced double entry created by APIs would decrease the amount of incorrect quote follow-ups, saving 11% to 17% of the broker’s effort in providing a quote. In personal lines auto, APIs shortened the duration of providing a quote “by up to half,” the white paper states.

APIs connect broker management systems (BMS) with carriers back-end systems, allowing the systems to talk to one another. This process allows brokers to input client data once in to the broker BMS, which would then be able to connect to carriers’ back-end systems in real time.

This is opposed to brokers entering client data once into their own BMS and then again into proprietary company portals, requiring multiple data entry, thereby creating more opportunities to make mistakes.

IBAC commissioned the study on APIs, which measured the effects of adopting API solutions into brokerage operations. The study focused on two of the Centre for the Study of Insurance Operations (CSIO)’s priority transactions for 2022 — personal lines quoting and personal lines policy change.

IBAC’s project team measured the time it took to process these transactions by observing live broker operations over a three-week period. A diverse set of brokerages participated. The working team identified the various steps in each transaction process, as well as the steps that would be taken out (or slimmed down) with the implementation of the relevant APIs. It then calculated the benefits of using APIs for broker-carrier connectivity.

IBAC found APIs would reduce the effort for brokers to make a policy change by 40% to 50%. It also reduced how long it took to make a policy change by the same amount.

“Up to [one third] of the effort and duration of the measured transactions could have been provided to the client as self-serve opportunities, further reducing the broker effort and increasing the level of the client experience,” IBAC’s white paper concluded.

The paper also observed a number of benefits for carriers in offering API broker-carrier connectivity solutions. Among them:

Access to data on quoted but not bound policies, allowing the carrier to accurately assess its competitive positioning and product offerings down to a granular level
Improved speed to market for rate changes by six to eight weeks, improving both competitive positioning and loss ratio
Reduced error correction and broker follow-ups, allowing for redeployment of underwriters into higher-value roles or a reduction in expenses

IBAC’s paper observes that APIs are still in a state of development and the industry will not be turning to API solutions at the drop of a hat.

“Real-time connectivity will not arrive in the broker channel all at once,” IBAC says in its white paper. “This is an incremental battle that will last for some time. We encourage brokers to discover the transactions that their vendor/carrier partners have already implemented and to make use of them. We also encourage carriers & vendors to continue to make investments in real-time connectivity.

“Given that there are benefits to customers, brokers and carriers, it makes sense to push this as hard and fast as possible.”

Feature photo courtesy of iStock.com/Who_I_am