When Enrique Laso joined MAPFRE USA as executive vice president of information technology in 2015, the insurance company’s legacy systems were showing their age.
The IBM AS/400- and mainframe-based applications the property and casualty insurer had relied on for many years were costly, inflexible and difficult to connect to the third-party data sources critical to policy underwriting, timely claims processing, and fraud prevention.
The company was also grappling with a strong undercurrent of change in the insurance business driven by challenging market conditions, technology disruption, and changing customer preferences. Although insurance has always been a data-driven business, competition was forcing companies to digitize and streamline their internal processes at a rapid pace.
“It was very difficult to integrate and make changes with the legacy systems,” Laso said. “We were having problems just finding people with the skills to maintain our existing systems.” Many other insurers were migrating away from the mainframe-based policy administration solution MAPFRE used, making the skills crunch more acute.
Migrate or switch?
The choice facing MAPFRE was whether to modernize its existing application and infrastructure or migrate to a new solution. “We realized that a step-by-step approach would take longer and be more complicated,” Laso said. “We also had to ensure there was minimal, if any, impact to our customers and agents in Massachusetts, our largest market.”
After considering various architectural approaches, MAPFRE migrated to a new core technology platform based on products from Guidewire Software and Duck Creek Inc. Among other vendors, the company engaged the technology and professional services firm, CGI, which had built MAPFRE’s mainframe solution years earlier, to assist with the project.
“CGI is a very well-established firm with whom we have conducted business for more than 50 years,” Laso said. “They had deep knowledge because of their experience providing our legacy platform, so when we had to transform our processes using new technology they were a clear choice.”
To minimize risk, MAPFRE chose to implement the new software in parallel in an independent, separated instance from its legacy systems. “It’s easier to manage risk with something independent from the systems in operation,” Laso told McKinsey.1 “This allowed us to manage the project risks while building and testing and then handle the main business risks in the rollout.”
Two-phase migration
The switchover would happen in two phases. The new system would go live first to handle new personal lines policies with an on-prem implementation as, at that point, no software-as-a-service options met MAPFRE’s needs. Then, in phase two, the commercial lines side of the business would migrate to a cloud-based platform.
After several months of testing, MAPFRE switched on the new system. Some disruption was inevitable, Laso said. For several months after go-live, agents had to switch between the legacy and the new systems, as policies were converted progressively upon renewal. The transition ultimately took about a year, but migration speed was less important to MAPFRE than minimizing business disruption, which it did successfully.
MAPFRE went live with the first phase of the new system, personal lines, in May 2020. The second phase, Commercial Lines, went live in March 2022.
The execution of this project came at an opportune time during the early phases of COVID-19. “The pandemic, and the years following it, have been very complex times in insurance,” Laso said. “It was a huge company effort, but this transformation has helped us improve our offerings and become a more data-driven company.” Despite the pandemic’s disruption, the migration was completed just one month behind schedule.
Reaping the benefits
Now that it is fully up and running with a new technology stack, MAPFRE is reaping the benefits of improved integration capabilities, a modern core system, faster access to data analytics, and greater underwriting and claims processing flexibility. Laso said he has made a point of opting for packaged solutions wherever possible and integrating with external applications and data sources through application program interfaces to minimize rigid, hard-coded connections.
“We put a lot of focus on the middleware layer to improve integration with many external third parties and internal applications,” Laso said. It’s far easier with the new system because integration is decoupled using APIs.”
Analysts now have access to modern tools for such tasks as forecasting and modeling risks. “Operationalizing advanced models in the old platform was very complex,” Laso said. “It’s important for us to be able to extract a lot of data from our transactional systems for our colleagues in analytics to develop and train our models. That process is now much easier.”
The new system has enabled MAPFRE to implement and operationalize advanced data analytics and artificial intelligence models that have helped serve its customers better and speed up claims processing.
The long partnership between MAPFRE and CGI has been key to the initiative’s success. The technology firm’s knowledge of MAPFRE’s technology and processes and its decades of experience supporting MAPFRE’s processing needs helped ensure that the two companies could focus their energies on business transformation through technology.
“The fact that CGI has been our vendor for more than 50 years speaks a lot about the trust and the quality of the relationship we’ve built,” Laso said.
For more information on how CGI can help aid your digital transformation, click here.
[1] Going all in: How one insurer updated its technology stack, McKinsey & Co, Jan. 3, 2022
Read More from This Article: How a 50-year partnership was instrumental in MAPFRE’s transformation
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