April 26, 2022

How APIs accelerate commercial auto insurance underwriting

Winona Rajamohan

Content Marketing Manager

In this joint blog with payroll and HR API provider, Finch, learn how information retrieval with APIs help increase revenue, quality of services, and productivity for commercial auto insurance providers.

Over the past 10 years, commercial auto underwriters have cited more than $22 billion in underwriting losses. To achieve long-term profitability, a 2020 report calls on providers to strengthen their collective focus on pricing, underwriting, and claims handling.

The industry is already responding.

Companies are taking advantage of stronger data ecosystems to withstand post-pandemic insurance prices, restrictive policies, and anxious drivers. Auto insurance rates have increased 3% in the United States from 2020 to 2021—but the rise in emerging telematics-based solutions has saved policyholders 4% on their insurance.

APIs can help commercial auto insurance providers improve underwriting models and customer experiences, whether that’s by streamlining broker communication or automating the retrieval of policyholder information.

In this blog post, learn how APIs can contribute to your goals and why the opportunity cost of implementation has never been lower.

How APIs give the commercial auto insurance providers a competitive advantage

For the commercial auto insurance industry, the potential advantages of API integrations—particularly integrations with vehicle data systems and HR and payroll systems—bolster customer satisfaction, retention, and profit margins. Here’s how:

Improve underwriting processes with real-time, granular data visibility 📈

API integrations help you stream data straight from the source, ensuring your underwriting model is informed by the most complete and up-to-date information available. For vehicle integrations, that includes commonly misreported data attributes like odometer readings, VINs, and garaging locations, while HR and payroll system integrations enable you to collect your customers’ employee census records in seconds.

Reduce operating costs with automated workflows ⏳

In the United States and Europe, companies spend an average of 5 hours each week on the duplication of responsibilities—time that you could otherwise spend delivering higher quality services and products. Without automation, you lose significant time sorting, extracting, and analyzing large sets of data on drivers, vehicles, and driving records.

An API helps your business speed up claims management by seamlessly communicating data across claimants, carriers, and brokers. By automating what data is retrieved from vehicles and when, businesses can avoid repetitive manual processes, hefty spreadsheets, and missing information. In short, your operational productivity increases as you reduce in-house costs for data management and quality assurance.

Increase revenue with a better user experience 💰

Amidst shifting workplace expectations and added economic anxiety, employers are more confident working with insurance carriers that are responsive, accurate, and easy to use. That’s how APIs give you a competitive edge—by allowing quick access to customer data for efficient broker communication and higher-quality risk assessment processes.

The stream of rich, real-time data APIs helps your business evolve beyond just insurance. The data visibility that APIs enable can position your app as a forward-thinking partner that guides customers to make better decisions. All of this starts with the standardization of data retrieval processes and the elimination of cumbersome CSV file uploads, reducing friction for all parties involved.

Remove the need for aftermarket hardware devices ⚙

Tracking devices on policyholders’ vehicles can provide useful information on their driving habits—but they are expensive, vulnerable to tampering, and prone to loss, damage, and labor-intensive installation.  In contrast, an API integration can communicate directly with the embedded cellular modems built into most new vehicles. They’re easy to set up, don’t require any hardware or installation, and reduce the risk of fraud.

APIs power more access to vehicle data

Enrollment for telematics-based insurance saw significant growth during the pandemic and is used by the most popular auto insurers today. Nearly half of the drivers who were given a telematics option for car insurance in 2021 opted into the program.

Connected car API platforms like Smartcar communicate directly with 4G and 5G telematics modems that are built into vehicles. In a few steps, Smartcar’s API can retrieve vehicle data such as odometer readings, location, VIN, and vehicle attributes.

For usage-based insurance (UBI) analytics provider True Mileage, odometer readings are automatically retrieved by clients at regular intervals. “I was completely awestruck when I learned that Smarcar enables insurers to connect to over 112 million vehicles,” said Ryan Morrison, CEO at True Mileage.

Here’s how that works:

  1. Customers link their car to your app: Vehicle owners are brought through Smartcar’s authorization flow, Smartcar Connect. The customer logs in with their car brand’s connected services account. In 2021, 66% of U.S. drivers were using connected car services. Check out Smartcar’s guides on how drivers can set up a connected services account if they don’t have one already.
  2. Customers consent to share their car information: Smartcar lets vehicle owners review exactly what information will be shared with your insurance app. Vehicles are linked only after the customer clicks “Allow” on the screen.
  3. The app requests vehicle data: After the customer has linked their vehicle, your app can begin collecting the necessary data to offer the best claims management processes and quotes.

With a single integration across multiple vehicle brands, you can improve data aggregation and extraction, present better quotes to customers, and expand risk management efforts with predictive analytics and pattern recognition.

APIs make it easy to retrieve employee information

Vehicle integrations are just the beginning. For commercial auto insurance providers, retrieving employee information is just as critical. Fortunately, Finch’s API makes it easy and intuitive. In just a few clicks, your customers can grant you access to their HR or payroll system, enabling a direct data stream and all of the insights that come with it.

The process is simple:

  • Finch Connect (a secure front-end modal) prompts your customers to choose their payroll or HR system.
  • Your customers authorize a set of permissions by entering their admin or API credentials into that system.
  • The connection is established.

From there, you can begin pulling the data you need to process a customer’s policy and enroll employees in coverage. Finch’s API endpoints offer remarkable depth, including:

  • Company data like your customers’ legal business name, EIN, departmental phone numbers, primary bank account number, and official address
  • Directory data, as in a full roster of your customers’ employees (historic and current), their first and last names, personal and work email addresses, date of birth, and home address
  • Employment data like job title (historic and current), supervisor, employment status (active or contractor, full-time or part-time), start date, and salary

In effect, Finch turns what was once a 30-day process, marked by clumsy document uploads and (seemingly) endless email back-and-forth, into a 30-second one—complete with richer, reliably accurate data.

To build or to buy?

There are many components to launching a software-driven auto insurance product for customers. You might consider custom integrations with vehicles and employer software, but the cost of building and maintaining all of those connections can impede product development and go-to-market plans.

Of course, reaping the benefits of providers like Smartcar and Finch requires outsourcing your API integrations, as opposed to building them in-house.

You may be asking yourself “do we build or do we buy?” While it’s natural to assume you can take on the work yourself (you do have a team of engineers, after all), there are a number of considerations you should weigh before taking that leap:

Team bandwidth and priorities 🗓

How much faster would you execute your roadmap if your team’s attention wasn’t split between your product and integrations? Integrations come with a heavy price tag when you consider the hours your team would spend building and maintaining connections. In fact, one Finch customer estimates it saved up to $100,000 by opting not to build in-house.

It takes a dedicated team to consistently monitor and troubleshoot APIs while providing technical support for both customers and internal teams building new features around the integration infrastructure. Partnering with an API platform can save your technical team weeks of engineering work that could otherwise be spent on core projects for customer acquisition and growth.

Agility to scale 🧾

Building one integration in-house might seem doable, but a single integration will only cover a fraction of your customer base. Your APIs need to scale as your audience does, but instead of getting easier, integrations only become more complex as you add to them. Disparate data sources have different data models, and the lack of standardization would force your developers to sort through heaps of unformatted data that your product does not need. When not done correctly, it can end up requiring a lot of manual intervention to make right.

A pre-built API ecosystem gives you the agility to expand existing offerings without the cost of developing new systems from scratch or upending existing ones. When smart charging app, Optiwatt, expanded its product compatibility to five new vehicle brands, they used Smartcar to ensure in-house developers could focus on upcoming new features instead.

Data privacy and security 🔐

Although APIs have become a common solution for businesses, these integrations are still vulnerable to cybersecurity risks if the right measures aren’t taken. Companies building their own API connections will need to stay on top of compliance processes and certifications at all times to build user confidence and meet industry standards. If you’re integrating your solution with vehicles, you will need to build out authentication, permissions, and token management systems to securely transfer mobility data with an API token. This increases the complexities of your integration development, especially when multiple OEMs don’t have their own tokens process in place.

Compounding maintenance costs 🛑

As a matter of course, integrations eventually break or malfunction due to system updates on your end or changes to the format of your data sources. Monitoring and troubleshooting these changes is a full-time job that will rob your team of valuable time and energy they could be spending on your core product. By having a dedicated team of experts to monitor and troubleshoot API errors, your business reduces the risk of technical backlogs and inconsistencies. Not only does this help you manage your maintenance costs, but it also increases the reliability of your product and boosts customer confidence.

Helping you build what your customers need

A great API platform is committed to ensuring high-quality integrations so you can spend your time building high-quality products. You can get started with API keys from Finch to connect to Human Capital Management systems or contact the Smartcar team to see how our vehicle integrations can benefit you!

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