Why sensible 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 operate, 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 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 known 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 affect of the worldwide pandemic and predicted recession. With a high-interest charge surroundings and future predicted volatility, prices want to return 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 should be extra agile, however must concentrate on 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 at present not potential as a result of lots of that logic is embedded within the mainframe. Due to this fact, 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 with a view 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 fee foundation, and drive progress, for instance, by including a wellness layer to their providing.

From a price 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 value. A legacy mainframe additionally has an affect on expertise, as devoted employees will likely 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 threat.

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

Mainframe modernization outcomes

Modernizing the mainframe presents some compelling advantages. By operating in a cheaper surroundings, working prices are drastically lowered, and the usage of a extra trendy 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 isn’t the one profit. Most significantly, mainframe modernization – by way of agility, flexibility and entry to crucial mainframe information – has a robust affect on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are in a position to leverage their mainframe information, which may comprise many years 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 abilities hole – it may well counter the issue many firms are dealing with as their mainframe specialists attain retirement age and may entice new expertise involved in modernizing core enterprise workloads.

Modernization additionally presents the power to deploy new options, merchandise and capabilities a lot faster and along with interoperable purposes, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities corresponding to the power 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 determined by the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization shouldn’t 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 extensive spectrum of decisions obtainable to modernize at a tempo that’s snug and vital for the insurer. In the present day’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 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 abilities, improve agility and cut 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 cut back complexity and prices
• Reimagine: Reimagining the enterprise totally 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 know-how used. The appliance is determined by whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small industrial and enormous industrial. Nonetheless, there are three key steps that decide the route 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 brought on by operating on the mainframe?

2. Figuring out funds constraints
   1. a. What’s the funds obtainable at present?
   2. b. What’s the period obtainable to appreciate ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT staff’s capability for transformation?
   2. b. Are there assets obtainable?
   3. c. Is there lots of different change taking place?

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

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

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