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 operate, many legacy mainframes lack the agility to fulfill 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 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 the 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 larger inflationary atmosphere bills for insurance coverage operations and rising claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest price atmosphere 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 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 presently not attainable as a result of lots 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 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 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 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 affect on expertise, as devoted employees might be required to supply upkeep and maintenance – a diminishing skillset as increasingly more senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise threat.

Modernizing the mainframe isn’t just about general agility, however securing a basis for vital technological transformation. In a latest report on Remodeling Claims and Underwriting with AI, Accenture illustrates with widespread business analysis that AI has emerged because the transformative expertise and important differentiator within the insurance coverage business 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 affords some compelling advantages. By operating in a cheaper atmosphere, working prices are drastically lowered, and using 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 – by way of agility, flexibility and entry to important mainframe knowledge – has a strong affect on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are capable of 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 vital position the modernization of the mainframe performs in closing the abilities hole – it will probably counter the issue many corporations are dealing with as their mainframe consultants attain retirement age and may entice new expertise excited about modernizing core enterprise workloads.

Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and along side interoperable purposes, guarantees as much as 5 instances 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 might be caused by conservative changes, or an entire system transformation. All of it is dependent upon the strategic and development 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 obtainable 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 contains SaaS options, Cloud maturity and advances in migration applied sciences.

When it comes to approaches, insurers can roll out the next interventions, which all range 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 threat referring to 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 knowledge to a brand new system to cut 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 applying is dependent upon whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private traces/small business and enormous 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 brought on by operating on the mainframe?

2. Figuring out finances constraints
   1. a. What’s the finances obtainable as we speak?
   2. b. What’s the period obtainable 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 obtainable?
   3. c. Is there lots of different change taking place?

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

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

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

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