Why good insurers are modernizing their mainframe now | Insurance coverage Weblog

In a market that calls on insurers to be agile and digitize at scale, an insurer’s mainframe can both catalyze or inhibit progress. Whereas the mainframe was as soon as a useful core technological operate, many legacy mainframes lack the agility to satisfy the calls for of buyer expectations and fast digital progress.

The decision for mainframe modernization

Insurers need to attain a digital end-state and embed the enabling capabilities they should carry out within the cloud utilizing a route that’s quicker, higher, and cheaper. Modernizing the mainframe is the final mile in direction of enabling enterprise capabilities, reimagining the enterprise and driving a cloud working mannequin.

If we take a look at the market forces shaping the broader trade, insurers are being referred to as upon to be extra agile in order to maintain tempo with quickly altering calls for. This is because of a variety of things, from increased inflationary atmosphere bills for insurance coverage operations and rising claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest charge atmosphere and future predicted volatility, prices want to come back down, and one of many prices that’s rising yr over yr is upkeep of the mainframe.

Zooming in on sectors inside insurance coverage, this want for agility is manifested in numerous methods. Property and Casualty (P&C) insurers not solely have to be extra agile, however have to deal with advertising and marketing factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement trade will profit from unlocking distribution, a feat which is presently not attainable as a result of a whole lot of that logic is embedded within the mainframe. Subsequently, the main focus is on modernizing the mainframe to allow digital channels. Group and Retirement insurers are present process a compressed transformation – that means that the sector requires reimagined operations from the bottom up as a way to enhance buyer relationships and achieve a aggressive benefit – with Group hurting on margins, and Retirement hurting on margins and scale. Lastly, Group and Well being insurers are being challenged to drive down the price foundation, and drive progress, for instance, by including a wellness layer to their providing.

From a value perspective, the case for mainframe modernization is evident.  The demand positioned on the insurance coverage infrastructure is rising, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and price. A legacy mainframe additionally has an influence on expertise, as devoted employees shall be required to offer upkeep and maintenance – a diminishing skillset as an increasing number of senior workers retire from the workforce. Down the road, this manifests as a substantial enterprise danger.

Modernizing the mainframe isn’t just about general agility, however securing a basis for vital technological transformation. In a current report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative expertise and important differentiator within the insurance coverage trade when utilized in tandem with people. Nonetheless, AI transformation just isn’t attainable if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe gives some compelling advantages. By operating in a inexpensive atmosphere, working prices are drastically lowered, and the usage of a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this can lead to a 40 p.c discount in working bills. Whereas this financial savings is critical, it isn’t the one profit. Most significantly, mainframe modernization – by way of agility, flexibility and entry to important mainframe knowledge – has a robust influence on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are capable of leverage their mainframe knowledge, which might comprise a long time of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog submit additionally illustrates the vital position the modernization of the mainframe performs in closing the talents hole – it could counter the issue many firms are going through as their mainframe consultants attain retirement age and also can appeal to new expertise fascinated about modernizing core enterprise workloads.

Modernization additionally gives the flexibility to deploy new options, merchandise and capabilities a lot faster and together with interoperable purposes, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities reminiscent of the flexibility to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages will be led to by conservative changes, or an entire system transformation. All of it depends upon the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization just isn’t a one-size-fits-all proposition. It’s pushed by the distinctive market wants of the insurer and the strategic intent of the enterprise. There’s a large spectrum of decisions accessible to modernize at a tempo that’s comfy and vital for the insurer. Right this moment’s mainframe migration expertise helps this, permitting for automated, quick, and low-cost migration to the cloud. This expertise consists of SaaS options, Cloud maturity and advances in migration applied sciences.

When it comes to approaches, insurers can roll out the next interventions, which all fluctuate in scale and depth:

• Re-platform: Migrating an software with out altering the programming language to a different platform / Working System
• Re-factor: Harnessing Accenture’s language migration toolkit to remodel from legacy to trendy programming language code, utilizing (semi) automated tooling to mitigate danger referring to legacy expertise, enhance agility and cut back prices
• Exchange: Figuring out a managed service/software that may present required performance, together with extracting and migrating knowledge to a brand new system to cut back complexity and prices
• Reimagine: Reimagining the enterprise completely with rewritten and rationalized purposes

How insurance coverage firms can start their mainframe modernization journey

There are nuances to how mainframe modernization is utilized inside insurance coverage. These options differ in depth from enterprise advantages to the expertise used. The appliance depends upon whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private traces/small business and huge business. Nonetheless, there are three key steps that decide the path of each mainframe modernization journey:

1. Defining enterprise priorities
   1. a. What are the best priorities for the enterprise?
   2. b. How do these align to the important thing issues attributable to operating on the mainframe?

2. Figuring out finances constraints
   1. a. What’s the finances accessible at the moment?
   2. b. What’s the period accessible to understand ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT group’s capability for transformation?
   2. b. Are there assets accessible?
   3. c. Is there a whole lot of different change occurring?

Following this course of leads to a singular mainframe modernization plan.

Accenture’s insurance coverage mainframe modernization methodology will aid you develop a journey aligned along with your targets. Contact us to get began.

Gas the way forward for insurance coverage: Expertise modernization, reminiscent of AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile progress each by way of rising revenues and slicing prices.

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