Why Do We Need APIs in Group Insurance?

The group insurance industry is facing challenges as it seeks to remain competitive in the digital age. One of the most pressing challenges is modernizing external integrations with benefits technology partners. Traditionally, group insurance companies have used electronic data interchange (EDI) to exchange data with their partners. However, EDI is a slow and error-prone process that needs to be better suited for the real-time demands of the digital age.

Application programming interfaces (APIs) provide a more modern and efficient alternative to EDI. APIs allow for real-time, fully validated data exchange, which is essential for providing the personalized services that customers demand. API integration offers improved customer experience through seamless and personalized interactions, such as self-enrollment in benefits and real-time claim tracking. It also reduces costs by automating data exchange between systems and eliminating manual data entry. Moreover, APIs increase agility by enabling easy adaptation to market conditions and facilitating partnerships and application development.

API integration is essential for the future of group insurance administration. While it may have its challenges, companies that fail to adopt APIs may be left behind as the industry continues to digitalize. Several factors that need to be considered include the current state of the company’s technology infrastructure, and the needs and capabilities of its partners.

Here are some considerations for transitioning to API integration:

  • Start by evaluating your current technology infrastructure. Do you have the necessary systems and processes in place to support API integration? If not, you may need to make some investments before moving forward. Frameworks like Gartner’s API Strategy Maturity Modeli is a great tool for this evaluation.
  • Get buy-in from leadership and determine business goals. API integration is a strategic decision that requires the support of senior management. Start by focusing on the areas where APIs can provide the most value, such as enrollment and claims processing. Make sure that you are backed by your leadership team before moving forward.
  • Middleware can be used to bridge the gap between EDI and API-driven data exchange. Third-party API hubs offer middleware solutions that include business rules and validations from the insurer, and real-time responses to errors. This can help reduce errors in EDI files and improve the overall efficiency of the data exchange process. While APIs provide a 100% solution over the long term, middleware can provide an adequate, 80% solution in the short to medium term.
  • API investments are critical for system modernization plans that involve upgrading policy administration software and integrating real-time capabilities. Keep in mind that achieving real-time data exchange can be challenging for group insurance companies that rely on mainframe systems with nightly batch cycle updates.

Group insurance companies face challenges in the digital age, especially with outdated integrations. APIs offer a modern and efficient alternative to slow error-prone processes like EDI. With API integration, you can provide personalized services in real-time, improving customer experience and reducing costs. You’ll also boost agility, allowing easy adaptation to market conditions and fostering partnerships. API integration is essential for the future of group insurance administration, so don’t get left behind. Evaluate your technology, get leadership buy-in, consider middleware as a transition solution, and make critical investments. Position your company for success by embracing APIs.

i Gartner, “Gartner’s API Strategy Maturity Model”, October 2019.

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