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 fast digital progress.

The decision for mainframe modernization

Insurers wish to attain a digital end-state and embed the enabling features 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 spread of things, from greater inflationary atmosphere bills for insurance coverage operations and rising claims, to the affect 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 several methods. Property and Casualty (P&C) insurers not solely have to be extra agile, however must give attention to advertising factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement business will profit from unlocking distribution, a feat which is at the moment not doable as a result of plenty 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 – which means that the sector requires reimagined operations from the bottom up so as 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 associated fee foundation, and drive development, 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 affect on expertise, as devoted employees can be required to offer upkeep and maintenance – a diminishing skillset as increasingly more senior workers retire from the workforce. Down the road, this manifests as a substantial enterprise threat.

Modernizing the mainframe isn’t just about total agility, however securing a basis for essential technological transformation. In a current report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread business analysis that AI has emerged because the transformative know-how and demanding differentiator within the insurance coverage business when utilized in tandem with people. Nonetheless, AI transformation will not be doable if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe affords some compelling advantages. By working in a inexpensive atmosphere, working prices are drastically lowered, and the usage of a extra fashionable platform dramatically reduces platform useful resource prices. Collectively, this may end up in a 40 p.c discount in working bills. Whereas this financial savings is critical, it’s not the one profit. Most significantly, mainframe modernization – by agility, flexibility and entry to crucial mainframe knowledge – has a strong affect on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are in a position to leverage their mainframe knowledge, which may 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 publish additionally illustrates the essential position the modernization of the mainframe performs in closing the talents hole – it may well counter the issue many firms are dealing with as their mainframe consultants attain retirement age and may also appeal to new expertise serious about modernizing core enterprise workloads.

Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and along with interoperable functions, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities similar to the flexibility to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages might be led to by conservative changes, or an entire system transformation. All of it relies on the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization will not be 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 broad spectrum of decisions accessible to modernize at a tempo that’s snug and obligatory for the insurer. At this time’s mainframe migration know-how helps this, permitting for automated, quick, and low-cost migration to the cloud. This know-how consists of SaaS options, Cloud maturity and advances in migration applied sciences.

By way of approaches, insurers can roll out the next interventions, which all differ 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 rework from legacy to fashionable programming language code, utilizing (semi) automated tooling to mitigate threat referring to legacy expertise, improve agility and cut back prices
• Substitute: 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 fully with rewritten and rationalized functions

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 know-how used. The appliance relies on whether or not the insurer focuses on life and annuities, group and well being, retirement, private traces/small industrial and huge industrial. 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 working on the mainframe?

2. Figuring out finances constraints
   1. a. What’s the finances accessible right this moment?
   2. b. What’s the length accessible to understand ROI?

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

Following this course of ends in a novel 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.

Gasoline the way forward for insurance coverage: Know-how modernization, similar to AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile development each by rising revenues and reducing prices.

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