Pekin Insurance Decreases Development Time by Months Through its AWS Cloud Transformation Program

With Deloitte, an APN Premier Consulting Partner and Multiple AWS Competency Holder including Data & Analytics, Migration, Financial Services, and Security

Prioritizing Digital Transformation to Compete in a Rapidly Changing Industry

For insurance providers to survive and thrive in a digital-first world, using data to move quickly and exceed customer expectations with rapid release of products and services is becoming critical.

At Pekin Insurance, an older technology footprint, a traditional approach to development, and its limited capability to respond quickly to market demands became a threat to the company’s ability to compete and thrive in the market. The company experienced losses in two of its lines of businesses due to constraints of its legacy systems to create and execute modern pricing models and conduct risk analysis.

“Core modernization is inevitable for us to survive. We know much of the world is digital and connected, and as the insurance industry continues to catch up, we do not want to be left behind. We want to be at the forefront of the digital evolution within the insurance industry and be leaders in predictive pricing modeling and the use of data to drive outcomes.” - Raju Debroy, Director of IT for Cloud & Digital Operation at Pekin

In 2016, when the company was running completely on premises, a new strategy was envisioned to modernize legacy core systems while migrating existing products and rolling out new products to the Guidewire insurance platform at an accelerated pace. At the end of 2016, Pekin’s leadership team began to evaluate how the company could leverage cloud technology to enable the accelerated strategy to modernize and in parallel transform its mindset and approach to development.

Focusing First on Business Outcomes and Cultural Evolution within Pekin

Pekin’s desired outcomes for its transformation were to expand its business, compete with larger competitors and emerging cloud-first insurance companies, reduce competitive and operational risk through better security and compliance governance, embrace automation to drive rapid development, run its core systems and software more cost-effectively and at scale, and give itself the opportunity to become more data-driven in its approach to solving business needs and meeting customer expectations.

After building a business case for moving to the cloud, Debroy and team found that it would be approximately 21 percent cheaper to develop on the cloud versus on premises. They also found that they would have increased capabilities to automate by taking an infrastructure-as-code approach to development.

The Pekin team knew it needed to focus on driving a cloud-first mentality internally while modernizing its core systems. The group decided to bring in a trusted advisor, Deloitte, to help them reshape their strategic transformation program called Pekin Insurance Virtual Overall Transformation, or PIVOT. With Deloitte’s support, Pekin also revitalized PIVOT with a cloud-first principle to drive digital transformation.

“Deloitte brought to the table strong knowledge of insurance and technology combined with deep expertise of the cloud,” says Debroy.

For the Pekin leadership team, Deloitte’s experience joined with its focus on understanding business needs differentiated the company from other consulting partners. "It's important for partners not just to bring the technology solutions and expertise to the table, but also to help us connect the dots across business outcomes," says Subhasis Mukherjee, vice president and chief information officer at Pekin. “We need to work with companies like Deloitte who help us evaluate the problems the business is facing today and the problems we may encounter in the future and come prepared to help us solve problems together from both technical and business perspectives.”

Deloitte first focused on getting buy-in from and cultivating cloud champions within the C-Suite at Pekin, continuing to build upon the clear business case to drive transformation. This meant helping the organization create an agile, nimble, and innovative culture within its teams, redefining the company’s IT operations model, building a minimum viable cloud (MVP) product with Guidewire and other technologies, and mapping out the desired outcomes for cloud transformation for 2018 and 2019.

“When we began working with Pekin, we helped the team refresh their business case and put the business benefits for moving to the cloud front and center,” says Keval Mehta, insurance cloud lead at Deloitte Consulting LLP. “We focused on how Pekin could use the cloud to drive growth and profitability while improving the agent experience.”

“I believe innovation isn’t sustained by random inspiration from one individual. Rather, it’s an enterprise capability in which everyone must work together towards the shared goal. AWS has given us a platform where we can all evolve and learn something from one another.”

- Subhasis Mukherjee, Vice President and Chief Information Officer at Pekin

Embarking on an Automation-Focused Cloud Journey with Deloitte and AWS

After evaluating all of the options for its cloud environment, Pekin decided to migrate to and build on Amazon Web Services (AWS).

“We chose to focus on buying over building and our environments included software and platforms we bought off-the-shelf, such as the Guidewire platform for policy, billing, and claims, Smartcom for document generation and communication, and MuleSoft for connecting applications, data, and devices,” says Mukherjee. “All of the products we had bought and wanted to bring with us on our journey integrated with, ran on, or were building capabilities for AWS. So, we decided that if we want to move to the cloud, we better follow the products we selected for our technology platforms. It was an easy choice for us."

Pekin approached its cloud transformation program in three distinct phases. Phase one focused on building an MVP on the cloud to deliver and confirm a business commitment to the broader project. “We began by hosting Guidewire and 17 additional applications on AWS,” says Mehta. “Moving forward into phase two, we began optimizing on-premises integrations with the cloud and focusing on automation and implementing a scalable DevOps model—taking advantage of AWS services like AWS CloudFormation and AWS CodeDeploy — for delivery and deployment.” Working with Deloitte and AWS, Pekin moved from six environments running in its data center to 36 environments running within 6-8 months on AWS. “Achieving that scale would not have been possible without the capabilities of AWS and Deloitte,” says Mukherjee.

A diagram of Pekin’s architecture on AWS

Pekin is currently in phase three of its program, focusing on building broader digital capabilities into its environment. The company is now running a chatbot proof of concept (POC) and an Amazon WorkSpaces POC on AWS, while also launching new digital channels, continuing to build out its new Innovation Center, and exploring artificial intelligence and machine learning tooling and solutions on AWS to cultivate a smarter approach to data and analytics. 

Reducing Time-to-Market, Saving Costs, and Embracing Change

In the first year after Deloitte was engaged on PIVOT, Pekin was able to release two products to market through the acceleration provided by the cloud-first focus. As a result, Pekin reduced its loss ratio for personal auto lines, and improved its profitability by 10 percent. The company is also saving about $30,000 a year of operational costs, per environment, by leveraging cloud elasticity. The money Pekin saves through its cloud-first approach is redirected to innovative projects to drive new business lines and enhance end customers’ experiences.

Since moving to AWS, Pekin has improved its availability by 95 percent, reduced its code and deployment rollouts from 48 hours to six hours, and has reduced its time to market from 8-12 weeks to 2-3 weeks. Whereas Pekin previously completed six production deployments in a year, the company increased its production deployment count to 28 within 11 months and intends to make these deployments even more frequent in future. Providing infrastructure and rapid provisioning of environments for deployment of new business capabilities is core to Pekin’s ability to meet its overarching goals.

Pekin’s leadership team believes the cloud is focal to the success of its transformation and ability to use technology as an enabler for the business. “I believe innovation isn’t sustained by random inspiration from one individual. Rather, it’s an enterprise capability in which everyone must work together towards the shared goal,” says Mukherjee. “AWS has given us a platform where we can all evolve and learn something from one another.”

Today, Pekin’s business leaders sit down with their IT partners and employees in one place—the company calls this OneTeam—to break down silos across the organization and work together to identify iterative steps to take to use technology and address business priorities.

Within the next year, Pekin will finish the PIVOT program and will have a completely modernized set of application platforms and data platforms. “Within the next few months, we’ll be moving all of these new platforms to run on AWS. That’s a big achievement for us,” says Mukherjee. The company’s accomplishments have not gone unnoticed in the insurance industry. In 2018, Pekin was awarded an Impact Award from the Novarica Insurance Technology Research Council, a peer community of hundreds of insurer CIOs, for its enterprise transformation program.

Using AWS, Pekin believes it has just begun to embrace the capabilities it needs to compete and thrive in a highly competitive market.

“The reason we wanted to move to AWS from the onset of our journey was to have the scale and speed we would need to drive long-term innovation. We are on track to finish our transformation project on-time, and AWS is going to continue to play a large part in the next steps of the digitalization of our business,” says Mukherjee.

“AWS is a place we plan to go to use our data platforms for data science and data-driven decision making for customer-oriented platforms to drive better customer experiences—whether it is a text-based, voice-based, or web-based engagement. We plan to focus on using artificial intelligence and machine learning to get deeper insights into how our products are performing for customers and how they’re being used to drive predictive capabilities and new digital services out to the market.”

About Pekin

Pekin Insurance has been providing dependable insurance coverage to families in their six-state marketing area since 1921. Pekin Insurance has grown into a company of more than 900 employees, 1,500 agencies, and 8,500 independent agents.

Challenge

Pekin began to feel negative impacts on its business due to its older technology footprint and traditional approach to development. The company began to evaluate how it could leverage cloud technology to enable the accelerated strategy to modernize and in parallel transform its mindset and approach to development.

Solution

Pekin chose to work with Deloitte to help reshape its strategic transformation program called Pekin Insurance Virtual Overall Transformation, or PIVOT. With Deloitte’s support, Pekin also revitalized PIVOT with a cloud-first principle to drive digital transformation. Deloitte first focused on getting buy-in from and cultivating cloud champions within the C-Suite at Pekin. Then, the company helped Pekin execute a large-scale migration to AWS.

Benefit

In the first year after Deloitte was engaged on PIVOT, Pekin was able to release two products to market through the acceleration provided by the cloud-first focus. As a result, Pekin reduced its loss ratio for personal auto lines, and improved its profitability by 10 percent. The company is also saving about $30,000 a year of operational costs, per environment, by leveraging cloud elasticity. The money Pekin saves through its cloud-first approach is redirected to innovative projects to drive new business lines and enhance end customers’ experiences.

About Deloitte

Deloitte is one of the largest professional services firms in the world and a leader in digital transformation strategy. Through a network of more than 312,000 professionals worldwide, industry specialists, and an ecosystem of alliances, Deloitte assists clients in turning complex business issues into opportunities for growth. Its market-leading teams help organizations transform in the digital era.

Published November 2019