Emulate State Farm’s HCLTech-built future-proof insurance infrastructure

State Farm reorganized its core IT infrastructure to keep up with digital shifts, reduce costs, enable growth, and catalyze continuous innovation by balancing in-house and outsourced capabilities.

HCLTech’s DNA in infrastructure and deep expertise led State Farm to select it to help achieve its IT goals. For HCLTech, supporting a digital foundation is not a peripheral service but a core offering, which played well into the scope of services State Farm needed.

The scope of infrastructure modernization required ingenuity from HCLTech

State Farm’s ability to run core applications that could support new offerings, regulatory requirements, innovation, customization, and continued adoption of the cloud relies in part on having the right infrastructure. The infrastructure core (or “the platforms”) serves more than 19,400 agents distributing State Farm products and handles more than 24,000 claims daily.

To help State Farm realize its IT goals, HCLTech took over the management and partnered with State Farm on an infrastructure transformation journey. The transformation scope includes open systems, mainframe, networks, internal communication and agency communication channels, service desk, and supporting workplace hardware technology. The partnership is expected to deliver SLA-driven operations, improve productivity, increase automation, and reduce incident volumes. It will also help accelerate the modernization of State Farm’s hybrid cloud environment while contributing to its ESG (environmental, social, and governance) goals.

HCLTech is investing strategically to help State Farm create value

HCLTech is leveraging the skills and knowledge of State Farm employees who are now part of the HCLTech family. HCLTech and State Farm are working together to improve resiliency and agility in the carrier’s infrastructure, supporting applications across State Farm’s investments, insurance products, and premium pricing models. HCLTech plans to introduce its accelerators, like CloudSMART and DRYiCE, with powerful partner ecosystems to help scale transformations and support next-generation cloud and AI. HCLTech will bring automation frameworks to address repeatable tasks, optimize the data-center footprint, and improve user and agent experience.

HCLTech plans to invest significantly in people, technology, tools, automation, and innovation. An example includes plans to set up physical centers in Bloomington and Phoenix as innovation hubs to drive and shape future technology transformation for the industry disrupted by digital. Service providers are increasingly putting more skin in the game to deliver successful outcomes.

Insurance carriers are balancing costs, growth, and innovation aspirations with partners like HCLTech as catalysts to help realize their priorities

Due to their size and complexity, carriers have faced many challenges in increasing productivity, despite their investments in digital technologies. However, the State Farm-HCLTech deal highlights the new urgent imperative for service providers to help modernize the core and progress carriers toward innovation maturity. The HFS pulse study shown in Exhibit 1 validates this call to action.

Exhibit 1:The insurance industry today is in favor of more ambitious structural changes to its business model to increase productivity and jump-start growth

Sample: HFS Pulse survey, 45 insurance (life and annuity, property and casualty, reinsurance) companies from Global 2000 enterprises
Source: HFS Research, 2023

The Bottom Line: Digital is disrupting the insurance industry, quickly separating winners from losers.

The main requirement to lead disruption in insurance is a modern infrastructure. We will see a spike in infrastructure modernization deals like the HCLTech-State Farm partnership inked with service providers. HCLTech plans to help transform State Farm infrastructure and deliver significant improvements in effectiveness, efficiency, productivity, and costs over the engagement term. For incumbent carriers facing the threat of disruption, following this example to leverage innovation could help make the difference between success and obsolescence.