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 worthwhile core technological perform, 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 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 have a look at the market forces shaping the broader trade, 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 setting bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest charge setting and future predicted volatility, prices want to come back 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 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 the moment not attainable as a result of plenty 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 – that means that the sector requires reimagined operations from the bottom up to be able 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 development, 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 impression on expertise, as devoted workers can be required to offer upkeep and maintenance – a diminishing skillset as an increasing number of senior staff 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 current report on Remodeling Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative know-how and demanding differentiator within the insurance coverage trade when utilized in tandem with people. Nevertheless, AI transformation will not be 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 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 important, it isn’t the one profit. Most significantly, mainframe modernization – by means of agility, flexibility and entry to important mainframe information – has a strong impression 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 comprise a long time of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog put up additionally illustrates the necessary function the modernization of the mainframe performs in closing the talents hole – it might counter the issue many corporations are dealing with as their mainframe specialists attain retirement age and may also appeal to new expertise inquisitive about modernizing core enterprise workloads.

Modernization additionally provides the power to deploy new options, merchandise and capabilities a lot faster and along with interoperable functions, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities equivalent 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 development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit 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 huge spectrum of selections out there to modernize at a tempo that’s snug and essential for the insurer. Immediately’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 fluctuate 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 remodel from legacy to trendy programming language code, utilizing (semi) automated tooling to mitigate threat regarding legacy abilities, improve agility and cut back prices
• Substitute: Figuring out a managed service/software 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 functions

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 know-how used. The applying is determined by whether or not the insurer focuses on life and annuities, group and well being, retirement, private traces/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 very 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 finances constraints
   1. a. What’s the finances out there at the moment?
   2. b. What’s the length out there to understand ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT staff’s capability for transformation?
   2. b. Are there sources out there?
   3. c. Is there plenty of different change occurring?

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

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

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

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