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Digitization of Insurance Industry Must Be Deployed Thoughtfully

Application Programming Interfaces are not a “single-bullet” solution that can simply be thrown at every problem.
  • Bill Pieroni
  • October 2021
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Three letters ubiquitous in any current discussion of insurance technology are “API.” Application Programming Interfaces—which most of us use every day, whether or not we realize it—are essentially tools and specifications that allow two applications to easily exchange data. Their utility to the insurance industry is obvious, as is the critical role they will play in our ongoing digitization and modernization.

However, like any technology, APIs are not a “single-bullet” solution that can simply be thrown at every problem and expected to fix years of accumulated technical debt. They must be deployed thoughtfully to maximize their potential.

We can better understand the impact of APIs on the future of the industry by looking at past stages of technological transformation. Insurers were early adopters of computing, beginning with an Infrastructure Era in the 1970s, when data processing was used to optimize costs by supporting the business with efficiency in back-office activities such as billing. In the Integration Era of the 1980s and 1990s, computing technology was increasingly leveraged in core activities such as claims and underwriting, with companies building more sophisticated systems to facilitate the transfer and distribution of data within the enterprise.

The 21st century ushered in the Sourcing Era, with stakeholders learning to adapt the business through new technology-centric processes. Data processing has become information technology, with the industry focused on finding the most cost-effective solutions to deal with changing consumer demands and product imperatives.

Since roughly 2015, we have seen a transition to a new stage: the Outcome Era. Forward-thinking insurance organizations are integrating operations and technology to build novel business models that thoughtfully leverage data to enhance current and future positioning. One critical imperative of this era is the need for standardized data formats to extract the maximum value from data exchange.

During 50 years of working with insurance data standards, ACORD has seen the mediums of data exchange evolve from static forms through flat-file, FTP protocols, SOAP and more—and now RESTful APIs. The same discrete data elements have been exchanged, whether captured in paper forms, EDI messages, or API calls.

One key difference is that APIs are active in a sense that older methods are not. In the past, data standards were developed and pushed out to the industry so that they could build or acquire the right solutions. Now, however, stakeholders want immediately consumable, working APIs—which, by their nature, essentially act as specification and solution in one package.

The industry needs to leverage a consistent set of atomic-level data elements to realize the full impact of the API revolution. There are significant potential network effects that will enhance the value of API adoption across all stakeholders—if the industry commits to a set of next-generation standards.

What are the critical success factors in navigating the API era? First, develop an explicit strategic intent specifically around API strategy and dedicate sufficient resources to execute on it. Just as importantly, adopt and implement consistent standards for API-enabled data exchange.

Finally, cultivate talent and culture that will embrace the power of next-generation, standardized data exchange and leverage it to its full potential—not just optimizing processes within their silo, but across the enterprise and the industry as a whole.

Best’s Review contributor Bill Pieroni is president and CEO of ACORD. He can be reached at

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