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 operate, 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 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 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 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 larger inflationary surroundings bills for insurance coverage operations and rising claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest price surroundings and future predicted volatility, prices want to come back 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 numerous methods. Property and Casualty (P&C) insurers not solely should be extra agile, however have to concentrate on 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 present not doable as a result of loads 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 – which means that the sector requires reimagined operations from the bottom up with the intention 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 value 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 influence on expertise, as devoted employees can be required to supply upkeep and maintenance – a diminishing skillset as increasingly senior workers retire from the workforce. Down the road, this manifests as a substantial enterprise threat.

Modernizing the mainframe is not only about general agility, however securing a basis for vital technological transformation. In a current report on Reworking Claims and Underwriting with AIAccenture 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 will not be doable 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 inexpensive surroundings, working prices are drastically lowered, and using a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this may end up in 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 important mainframe information – has a strong influence on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are capable of leverage their mainframe information, which may 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 vital position the modernization of the mainframe performs in closing the talents hole – it might probably counter the issue many firms are dealing with as their mainframe specialists attain retirement age and can even appeal to new expertise concerned with modernizing core enterprise workloads.

Modernization additionally presents the power to deploy new options, merchandise and capabilities a lot faster and together with interoperable purposes, guarantees as much as 5 instances deployment speeds. New enterprise capabilities akin to the power to include AI and ML, real-time decision-making and information 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 progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable 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 extensive spectrum of selections out there to modernize at a tempo that’s snug and vital for the insurer. Right this moment’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 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 expertise, enhance agility and scale back prices
• Exchange: 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 solely 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 appliance relies on 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 path 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 attributable to operating on the mainframe?

2. Figuring out finances constraints
   1. a. What’s the finances out there immediately?
   2. b. What’s the period out there 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 out there?
   3. c. Is there loads of different change occurring?

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

Accenture’s insurance coverage mainframe modernization methodology will make it easier to develop a journey aligned along with your targets. Contact us to get began.

Gas the way forward for insurance coverage: Know-how modernization, akin to AI and cloud-fueled information analytics, helps insurers ship worthwhile progress each by means of rising revenues and slicing prices.

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