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

The insurance carrier’s ability to run core applications that could support new offerings, regulatory requirements, innovation, customization, and a future move to the cloud relies on having the right infrastructure. The modern infrastructure core needs to serve more than 19,400 agents distributing State Farm products and handling more than 24,000 claims daily.

To help State Farms realize its IT goals, HCLTech took over the management and transformation of the infrastructure, including open systems, mainframe, networks, internal communication and agency communication channels, service desk, and supporting workplace hardware technology. The transformation manifested in improved demand and capacity planning, rationalized application configurations, automation and AI adoption, and a cloud-ready technology stack. Targets include decreasing ticket creation by 40% to drive a 50% reduction in carbon footprint by 2030.

HCLTech invested strategically to help State Farm create value

HCLTech set out to extract the tribal knowledge from State Farm’s infrastructure operations teams. It built resilience and agility into the infrastructure, supporting applications across State Farm’s investments, insurance products, and premium pricing models by leveraging its accelerators like cloud smart and DryiCE, which come with powerful partner ecosystems to help scale transformations and support next-generation cloud and AI. HCLTech brought automation to address repeatable tasks, optimized the data-center footprint, and built user personas to tailor the user experience.

HCLTech invested more than US $35 million to support transition, automation, innovation, and people retention. An example includes setting up physical centers in Bloomington and Phoenix as insurance 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 struggled to increase productivity despite their investments in digital technologies. However, the State Farm–HCL Tech 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 transformed State Farm from an inflexible, legacy-mainframe-backed infrastructure to a modern architecture with a configuration-based system. The new infrastructure offers effectiveness, efficiency, cost savings, and a 35% improvement in productivity over the five-year deal term. For incumbent carriers facing the threat of disruption, following this example to leverage innovation could help make the difference between success and obsolescence.