By Meg Collins, Chief Growth Officer at Ideon

In the rapidly evolving world of employee benefits, brokers are seeing the acronym APIs - Application Programming Interfaces - pop up more frequently. But it’s more than just a buzzword. Employers are asking about them, and questions about APIs are appearing in RFPs for carriers, benefits administration software, and other vendors.

But what exactly is an API, and how is it reshaping the benefits industry? As a broker, understanding APIs may seem optional today, but it won’t be for long.

To stay ahead, you won’t need to be an API expert. You’ll just have to understand API basics, keep up-to-date on the latest trends, and ask the right questions. This approach establishes you as a tech-savvy advisor, ensuring your clients choose the carriers and vendors that deliver top-tier experiences.

API Basics

Simply put, an API allows two or more different software applications to communicate with each other efficiently and in real-time. Consider how a GPS navigation app like Google Maps suggests real-time traffic updates and route changes. It uses APIs to gather up-to-date traffic information from various sources, enabling it to effectively guide you to your destination.

In the benefits industry, APIs similarly connect different systems from insurance carriers to HR and benefits platforms like ADP, PlanSource, and Employee Navigator ensuring seamless data exchange for benefits management.

Several tasks during the typical benefits experience require these systems to send information back and forth: submitting member data at initial enrollment and during life events, EOI (evidence of insurability) applications and decisions, and case installation are just a few common examples.

Although EDI (electronic data interchange) has been the prevailing method for data exchange, it falls short of permitting the smooth digital experiences that today's members crave. APIs are emerging as the industry’s next iteration of data connectivity, and it’s easy to see why. In an age where people are accustomed to instant digital services Amazon, Netflix, food delivery apps, etc., the slower nature of EDI doesn’t quite measure up to expectations APIs, on the other hand, allow for real-time data sharing.

Imagine enrolling in a medical plan this morning and being able to pick up your prescription this afternoon APIs are turning this into reality. They lead to enhanced member experiences, automated processes (resulting in less administrative work for brokers!), and, overall, a smoother benefits journey for all parties involved. API-driven carriers and benefits administration platforms offer superior service to brokers, employers, and employees: faster enrollment, reduced data errors, efficient account maintenance, and more.

APIs truly are the backbone of digital transformation, and we’re really just getting started.

The Current State of API Adoption

APIs sound ideal, so they must be everywhere, right? Not quite yet. Ideon and LIMRA recently surveyed leading carriers to provide a window into the industry’s current state of API adoption.

The main takeaway: Most ancillary and voluntary benefits carriers are developing APIs, but the actual adoption and usage of those APIs remains quite limited. For example, while 76% of carriers report having API connectivity with external platforms, only 8% use it for most or all of their transactions.

A review of data exchange speed tells a similar story. Despite almost half of carriers claiming real-time capabilities, 84% stated that the majority of their benefits data is not processed in real-time.

And speed like this really makes a world of difference. When updates can be implemented in days instead of months, brokers can say ‘yes’ to lastminute client requests for plan changes or even adding a new benefit.

Overall, there’s a strong foundation for widespread adoption of APIs. However, there’s still much work to be done in order for most brokers, HR teams, and employees to reap the benefits.

Decoding Broker Needs and Knowledge Gaps

Adoption may be limited now, but the tide is turning Brokers don't need to know the nitty gritty, technical details about APIs, but understanding the basics and asking the right questions is essential. When discussing APIs with carriers, tech vendors, or clients, focus on the types of data exchanged, the frequency of data synching, and whether your client’s preferred carrier-platform combinations are supported by APIs.

It's all about ensuring that the solutions you bring to your clients are not just API-enabled but API-efficient, enhancing the overall member experience.

What's at Stake

APIs can streamline processes, reduce errors, and improve overall client satisfaction. However, if we as an industry fail to improve our API adoption rate, it could leave brokers and their clients lagging in a rapidly digitizing world. Over the next few years, there will be clear winners in the API development race among carriers and benefits platforms.

And that’s an opportunity for brokers.

Those who embrace their role as technical advisors, directing clients to the best-integrated solutions, will leapfrog peers and become industry leaders.

After all, the shift towards API connectivity is not merely an upgrade – it's a transformative change in the way the industry does business, a realignment to match the digital expectations of today's employees. It’s worth being at the forefront of such a monumental moment.

A Look Ahead

Understanding APIs is not just about keeping up with the latest buzzword or technology; it's about moving the entire industry toward a more connected, efficient future. All industry participants brokers, carriers, technology platforms must embrace and advocate for effective API utilization. Stay tuned for another article next month, where we'll delve into how we can collectively push forward in this journey.

Meg Collins, Chief Growth Officer, Ideon - Formerly a broker and a leader at Benefitfocus, Meg brings her unique perspective to her current role leading sales and marketing at Ideon. Driven by her firsthand insights into the industry’s outdated data connectivity, her mission is to champion modern, API-powered data exchange for carriers, benefits platforms, and brokers, ultimately driving better outcomes for the most important stakeholder: the member.