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 helpful core technological operate, many legacy mainframes lack the agility to satisfy the calls for of buyer expectations and fast 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 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 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 larger inflationary surroundings bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest price surroundings 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 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 a variety 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 – that 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 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 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 supply 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 essential 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 demanding differentiator within the insurance coverage business when utilized in tandem with people. Nonetheless, AI transformation is just not 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 surroundings, 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 important, it isn’t the one profit. Most significantly, mainframe modernization – via agility, flexibility and entry to crucial 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 many years of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog submit additionally illustrates the essential 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 may also entice new expertise concerned with modernizing core enterprise workloads.

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

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization is just not 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 decisions obtainable to modernize at a tempo that’s comfy and mandatory for the insurer. Right now’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 differ 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 danger referring to legacy abilities, improve agility and cut back prices
• Change: Figuring out a managed service/software that may present required performance, together with extracting and migrating information to a brand new system to scale 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 appliance is dependent upon whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private traces/small industrial and enormous industrial. Nonetheless, 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 funds constraints
   1. a. What’s the funds obtainable as we speak?
   2. b. What’s the length obtainable to appreciate ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT crew’s capability for transformation?
   2. b. Are there sources obtainable?
   3. c. Is there a variety of different change taking place?

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

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

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

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