(Photo credit: Bratislav Tabaš.)

In early 2017, Grinnell Mutual Reinsurance Company (Grinnell, Iowa), a regional property/casualty insurer and reinsurer doing business in 15 states, announced that it had chosen Guidewire Software (Foster City, Calif.) as a platform for transformation. Persuaded of the benefits of a change of course, the insurer has now embraced the cloud deployment option for the Guidewire systems. The company is currently migrating the platform to Guidewire Cloud across all lines of business, beginning in Pennsylvania.

“We initially selected InsurancePlatform because we believe in Guidewire’s vision, product maturity, and innovation, and ability to deliver on the biggest organizational transformation we have undertaken,” comments Roby Shay, CIO and VP, Enterprise Solutions, Grinnell Mutual. “We are confident that moving to Guidewire Cloud will help us further transform our business and continue our commitment to providing our insureds, agents, and mutual members with the very best insurance products and service we can offer.”

Guidewire Cloud is powered by AWS’s (Seattle) cloud infrastructure, with SLAs backed by experienced Guidewire teams and SaaS-certified partners spanning application management, system administration, security and compliance, upgrades, QA testing, health checks, and other services. The vendor pitches Guidewire Cloud as a means by which insurers can focus on business agility while transferring undifferentiating IT responsibilities to Guidewire.

Insurers Embracing the Cloud Option

Grinnell’s decision is representative of a trend of insurers opting to move their core systems into the cloud as part of a vendor’s software-as-a-service offering, according to Jeffrey Goldberg, senior VP at research and advisory firm Novarica (Boston). He explains that despite the industry’s initial resistance to giving up on-premise control of their core processing, the values to the carrier in taking this approach are outweighing any lingering concerns.

“One of the first barriers was a concern about security and scalability, and while this may have been a legitimate problem in the earlier days of cloud-hosted offerings, today most insurers recognize that technology companies and professional cloud hosting options bring an increase to security and scalability rather than a decrease,” Goldberg says. “Additionally, the recognition that maintaining local servers isn’t a core competency resembles a previous wave of insurers recognizing they are better off licensing core systems rather than building them internally. Finally, a key driver to cloud and SaaS core systems is the way it reshapes the relationship between an insurer and a core system.”

One of the major promises of a vendor system is that the insurer will be able to take advantage of ongoing vendor investment and get new features and capabilities, Goldberg continues. The reality of the last two decades has been that insurers fail to keep up-to-date, resulting in legacy technology just as if they’d built it in-house. “Shifting to a cloud approach where the vendor takes tighter control of the servers and system will lead to a new industry approach whereby insurers are kept on the upgrade path and vendors are invested in the continual availability of all their clients,” he says. “This may not be the primary reason insurers are making the switch, but it will end up being the fundamental difference in the vendor/carrier/system relationship.”

Cloud as the Next Level of Vendor Relationship

Grinnell was encouraged by the progress it was making on its on-premises Guidewire implementation, when the vendor team discussed the potential of the vendor’s Cloud SaaS business model, including the additional responsibility that Guidewire takes on as part of that model, according to Alex Naddaff, chief cloud officer, Guidewire Software. Grinnell showed interest in taking the relationship to what Naddaff characterizes as the next level.

“Grinnell sees the value of moving to the cloud and views it as part of its long-term plan,” Naddaff elaborates. “It provides more accountability from Guidewire, one-hand-to-shake, and a greater ability to accurately predict cost. Guidewire Cloud incorporates a full SaaS business model, which guarantees reliability, performance, and security backed by Service Level Agreements. The company understands that the cloud is Guidewire’s strategic direction, that we’re making a lot of investments to be able to work more closely with customers in the long-term.”

Vote of Confidence

“Grinnell recognizes the advantages of running its business in the cloud,” comments Steve Sherry, chief sales officer, Guidewire Software. “We are humbled by their vote of confidence in our cloud services capabilities and applaud their mission of providing quality insurance and service to agents and policyholders as they adapt their business for success in a time of accelerating change.”

Naddaff describes Grinnell as a customer-focused insurer based on deep and strong relationships with its stakeholders. “Guidewire is working with Grinnell to establish that same deep bond between our companies,” he adds. “We are thrilled to have Grinnell join our cloud community and also act as a Guidewire advisor.”

Grinnell Mutual Drives Transformation with Guidewire Core and Digital Systems