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 useful 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 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 the 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 business, 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 spread of things, from increased inflationary setting bills for insurance coverage operations and growing claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest price setting and future predicted volatility, prices want to return down, and one of many prices that’s growing 12 months over 12 months 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 have to give attention to 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 numerous 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 so as 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 associated 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 obvious.  The demand positioned on the insurance coverage infrastructure is growing, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and price. A legacy mainframe additionally has an impression on expertise, as devoted employees will probably 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 is not only about total agility, however securing a basis for essential 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 important differentiator within the insurance coverage business when utilized in tandem with people. Nevertheless, AI transformation just isn’t attainable if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe provides some compelling advantages. By working in a inexpensive setting, working prices are drastically lowered, and using a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this can lead to a 40 % discount in working bills. Whereas this financial savings is critical, it isn’t the one profit. Most significantly, mainframe modernization – by means of agility, flexibility and entry to crucial mainframe knowledge – has a robust impression on enterprise worth. As a current 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 submit additionally illustrates the essential function the modernization of the mainframe performs in closing the talents hole – it may counter the issue many firms are going through as their mainframe specialists attain retirement age and can even appeal to new expertise excited by modernizing core enterprise workloads.

Modernization additionally provides the power to deploy new options, merchandise and capabilities a lot faster and at the side of interoperable functions, guarantees as much as 5 instances deployment speeds. New enterprise capabilities resembling the power to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages will be caused by conservative changes, or a whole system transformation. All of it relies on the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit 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 vast spectrum of selections out there to modernize at a tempo that’s comfy and mandatory 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.

When it comes to approaches, insurers can roll out the next interventions, which all range 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 trendy programming language code, utilizing (semi) automated tooling to mitigate threat referring to legacy abilities, enhance agility and cut back prices
• Change: 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 solely 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 expertise used. The applying relies on whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small industrial and enormous industrial. Nevertheless, there are three key steps that decide the route 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 working on the mainframe?

2. Figuring out funds constraints
   1. a. What’s the funds out there right now?
   2. b. What’s the period 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 assets out there?
   3. c. Is there numerous different change occurring?

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

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

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