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 precious core technological perform, many legacy mainframes lack the agility to fulfill the calls for of buyer expectations and speedy 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 sooner, 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 have a look at the market forces shaping the broader business, 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 surroundings bills for insurance coverage operations and rising claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest fee surroundings and future predicted volatility, prices want to return down, and one of many prices that’s rising 12 months over 12 months is upkeep of the mainframe.

Zooming in on sectors inside insurance coverage, this want for agility is manifested in several methods. Property and Casualty (P&C) insurers not solely must be extra agile, however have to concentrate on advertising and marketing factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement business will profit from unlocking distribution, a feat which is presently not attainable as a result of a variety of that logic is embedded within the mainframe. Due to this fact, the main target 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 acquire 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 price perspective, the case for mainframe modernization is obvious.  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 workers might be required to offer upkeep and maintenance – a diminishing skillset as an increasing number of senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise threat.

Modernizing the mainframe is not only about total agility, however securing a basis for necessary technological transformation. In a current report on Remodeling Claims and Underwriting with AI, Accenture illustrates with widespread business analysis that AI has emerged because the transformative expertise and significant differentiator within the insurance coverage business when utilized in tandem with people. Nevertheless, AI transformation is just not 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 surroundings, 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 important, it’s not the one profit. Most significantly, mainframe modernization – via agility, flexibility and entry to important mainframe information – 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 information, which might comprise a long time of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog publish additionally illustrates the necessary function the modernization of the mainframe performs in closing the talents hole – it could possibly counter the issue many corporations are going through as their mainframe specialists attain retirement age and may appeal to new expertise involved in modernizing core enterprise workloads.

Modernization additionally gives the flexibility to deploy new options, merchandise and capabilities a lot faster and at the side of interoperable purposes, guarantees as much as 5 instances deployment speeds. New enterprise capabilities akin to the flexibility to include AI and ML, real-time decision-making and information processing effectivity are additionally unlocked. These advantages might be caused by conservative changes, or an entire system transformation. All of it is dependent upon the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization is just not 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 huge spectrum of selections accessible to modernize at a tempo that’s comfy and mandatory for the insurer. At this time’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 differ in scale and depth:

• Re-platform: Migrating an utility 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 threat referring to legacy expertise, improve agility and scale back prices
• Substitute: Figuring out a managed service/utility that may present required performance, together with extracting and migrating information to a brand new system to scale back complexity and prices
• Reimagine: Reimagining the enterprise fully with rewritten and rationalized purposes

How insurance coverage corporations 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 is dependent upon whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private strains/small industrial and huge industrial. Nevertheless, there are three key steps that decide the course of each mainframe modernization journey:

1. Defining enterprise priorities
   1. a. What are the very 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 price range constraints
   1. a. What’s the price range accessible at present?
   2. b. What’s the length accessible to understand ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT workforce’s capability for transformation?
   2. b. Are there sources accessible?
   3. c. Is there a variety of different change occurring?

Following this course of ends in a singular mainframe modernization plan.

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

Gas the way forward for insurance coverage: Know-how modernization, akin to AI and cloud-fueled information analytics, helps insurers ship worthwhile progress each via rising revenues and reducing prices.

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