AMERICAN FARMERS: Cloud Core Systems Conversion
American Farmers and Ranchers Mutual Insurance Company (AFR) implemented a new cloud-based core system, with the first LOB going live in less than seven months for less than $500K. Underwriting cycle times have been reduced by more than 90%.
American Farmers and Ranchers (AFR)’s legacy core systems presented unacceptable limitations in functionality, speed to market, and cost of ownership. To remain competitive, the company needed to replace their legacy system. AFR experienced 7 failed modernization initiatives between 1994-2015, at a cost of $35M.
AFR’s Board of Directors appointed a new team composed of a Director of Development, six engineers, and nine testers. AFR’s team participated in training in agile software processes and community source development.
Phases and Timeline
AFR began with wide project targets and refined objectives and action items at two-week intervals according to agile methodologies. At each review, the scope was evaluated and reduced where possible. Using this technique, they brought the Dwelling line live in less than six months.
Tools and Technology
AFR chose BriteCore, cloud-based core systems suite, which includes policy, billing, claims, and portal components. BriteCore is hosted through Amazon Web Services (AWS) and utilizes a modern technology stack.
Backend: Python, Pandas/Jupyter, MySQL/ AWS Aurora, Redis, Rabbit MQ, JINJA2, pytest/Selenium
Devops: AWS Elastic Container Service, AWS RDS, AWS S3, AWS Elasticsearch, AWS Autoscaling, AWS ElastiCache, AWS Identity & Access Management, Kibana 4, Icinga, Jenkins, RunDeck, GitHub, Salt Stack, Puppet
Adopting agile methodology for roll-out was a cultural challenge in a traditional organization that was used to waterfall development. The vendors’ experience with agile was credited with helping the company adapt.
The company credits its success to Agile processes that allowed the team to focus on incremental delivery without the pressure of a master project plan. As deliverables were completed, scope was reduced and targets were progressively refined. Second, community source development allowed AFR to extend the base platform, reducing the need for coordination between software vendor and carrier. Finally, Cloud deployment through AWS eliminated the need for costly infrastructure.
The company instituted its first line of business on the new platform in seven months with a total investment less than $500,000 (or 0.4% written premium) and a significant increase in underwriting efficiency, shortening the underwriting. In the long term, AFR expects to see cost savings through retiring their mainframe, resizing their SAN, reducing off-site physical hardware storage, and disaster recovery. As a whole, AFR’s annual budget has decreased by 33% since switching from their legacy system to BriteCore (excluding the cost of additional carryover items not replaced by BriteCore such as email and desktop support).
Published in Novarica's Research Council Study: Best Practices Case Study Compendium, 2016