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 invaluable core technological perform, many legacy mainframes lack the agility to satisfy the calls for of buyer expectations and speedy 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 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 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 greater inflationary atmosphere bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest charge atmosphere 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 several 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 business will profit from unlocking distribution, a feat which is at the moment not potential as a result of a number of that logic is embedded within the mainframe. Subsequently, the main target 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 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 associated fee 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 value. A legacy mainframe additionally has an impression on expertise, as devoted employees shall 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 danger.

Modernizing the mainframe isn’t just about total agility, however securing a basis for necessary technological transformation. In a latest report on Reworking 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. Nonetheless, AI transformation just isn’t potential if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe provides some compelling advantages. By operating in a cheaper 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’s not the one profit. Most significantly, mainframe modernization – via agility, flexibility and entry to important mainframe information – has a strong impression on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are in a position to leverage their mainframe information, which might include 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 position the modernization of the mainframe performs in closing the talents hole – it will probably counter the issue many firms are going through as their mainframe specialists attain retirement age and can even appeal to new expertise concerned about modernizing core enterprise workloads.

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

New platforms and migration applied sciences enable 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 out there to modernize at a tempo that’s snug and obligatory for the insurer. As we speak’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.

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 rework from legacy to trendy programming language code, utilizing (semi) automated tooling to mitigate danger regarding legacy expertise, improve agility and cut back prices
• Change: 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 expertise used. The applying depends 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. Nonetheless, 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 brought on by operating on the mainframe?

2. Figuring out price range constraints
   1. a. What’s the price range out there at present?
   2. b. What’s the length out there 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 out there?
   3. c. Is there a number of different change occurring?

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

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

Gasoline the way forward for insurance coverage: Expertise modernization, resembling AI and cloud-fueled information analytics, helps insurers ship worthwhile progress each via rising revenues and slicing prices.

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