AMF left the mainframe and lower fees by 300 million SEK a year
One of Sweden´s largest pension company AMF and Itello migrated over 5 million insurance policies in one of the largest insurance migration project in Europe. The project enabled AMF to leave an outdated mainframe environment in favor of a modern. The migration also reduced the number of administrated policies and reduced the cost for the policy holders.
In an article in Computer Sweden, Camilla Larsson was interviewed regarding AMF:s migration of 5 million insurance policies from an existing mainframe environment to a modern platform and lowered the cost for its policyholders with 300 million SEK per year
In the autumn of 2016, Swedish pension company AMF migrated over five million life pension policies from a mainframe system to a standard system. The result: 2.9 million customers now pay an average of 130 SEK instead of 260 SEK - and the functionality have been improved
AMF manages the pensions of four million Swedes and manages assets of a staggering 550 billion SEK.
For 2.9 million of the customers, the average annual fee was recently halved - a total of 300 million in lower fees to AMF each year - in connection with a migration of their policies to a modern IT platform.
AMF is jointly owned by The Swedish Trade Union Confederation - LO and the Confederation of Swedish Enterprise – Svenskt Näringsliv, and was founded to manage pensions for private sector employees. It is a company where the customers rarely keep in touch with AMF before the age of 55 says Camilla Larsson, Head of Insurance, who also has overall responsibility for IT.
- Many of our customers do not know they are our customers, and many have not actively chosen us, since we are the default choice for those who do not choose their pension actively, she says.
AMF is a non-profit organisation and all potential profit goes back to the savers. This means that the entire business mission is more about streamlining and triming costs, and less about exciting cutting-edge ideas. - We have three core values of our work - Safe, Humane and Simple. And Simple is our biggest challenge when it comes to pensions
In order to make it look easy for the customers it also has to be simplified on the inside. - Our success lies in that the operation and IT reduces the complexity, says Camilla Larsson.
A major step in this direction was made in the autumn when five million insurance policies for private sector employees were migrated from the mainframe environment into a modern, standardised IT platform from Itello, a vendor AMF worked with for some years.
But it was not just migrating of technology from one platform to another declares Camilla Larsson.
- We began thinking of an Iphone. Our business did not operate as an Iphone, we were still carrying around with a big and bulky old-fashioned phone - and many generations after that as well. Today we take for granted that the address book will be updated when we change mobile phone. Similarly, we want our terms to the customers to comply with our various insurance products. So there was time for a change.
Since 1998, when it became possible to select occupational pension, there have been several changes in the terms which have resulted in the development of new policies by AMF. A customer who has been in the same pension scheme since before 1998 can have four generations of policies without knowing it. This needed to be handled in a simpler way. - We saw that we had developed our best offers to the customers after 2014 and thought about how that could challenge us onwards. What we could not compromise, was the promises to our customers regarding the guaranteed pension and the capital that the customer has saved. But if we retain the promises and change other conditions, we can facilitate the process, she says.
And then it is not just a pure technology move from the mainframe to a modern platform explains Camilla Larsson.
- No, it would not provide any significant leverage to just add the policies with the same terms. Then the migration does improve the functionality for customers. What we did first, was to change the terms - a giant work of mailings to our nearly three million affected customers. After the terms were changed, we migrated them from the mainframe to a new technical environment.
The change went through Fora, one of the selection centres where the end customers choose their pensions. If you change jobs, for example, from private to state sector, the selection centre changes as well. That is another part of the complicated and complex Swedish pension world.
But despite the complexity, the migration took only 33 days.
- We completed three rehearsal migrations before we started to migrate the policies. Then we migrated the policies in large chunks, the biggest migration involved 25 million transactions over a period of 31 hours. And we took days inbetween to reconcile.
Inside AMF it has been a lot of work to anchor the change to a standard system.
- The first time we looked at the system, there were many who responded: "we do not work in that way here". But then we started testing with a lot of roomy discussions I hope. In this way we were well prepared when we started the migration project.
For customers, the change was not noticed so much, although it generated a few error reports. Now they get a clear result with reduced fees and more functionality. For example, they can move all their insurance policies and get an overview easier.
The next few years, AMF expects to change the terms for additional 800,000 customers from government and municipal pension schemes and private sector “white collar” schemes in the same way. The journey towards simplification will continue. Our CRM system was replaced two years ago to Salesforce cloud environment and our adjustment to standardisation continues. Around 2021 AMF will have left the mainframe environment completely, since some system that must remain a few years for various regulatory reasons.
- We are actively working to keep down the number of systems. To be successful it is in the IT architecture you should put your gunpowder. Try to keep data and functions in one place and instead of lying around here and there.