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 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 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 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 increased 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 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 several methods. Property and Casualty (P&C) insurers not solely should be extra agile, however must give attention to 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 doable as a result of loads of that logic is embedded within the mainframe. Subsequently, 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 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 progress, 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 impression on expertise, as devoted workers shall be required to supply upkeep and maintenance – a diminishing skillset as increasingly senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise danger.

Modernizing the mainframe is not only about total agility, however securing a basis for necessary technological transformation. In a latest report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative know-how and important differentiator within the insurance coverage trade when utilized in tandem with people. Nevertheless, AI transformation just isn’t doable 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 surroundings, 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 critical, it isn’t the one profit. Most significantly, mainframe modernization – by agility, flexibility and entry to crucial mainframe knowledge – has a strong impression on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are in a position to leverage their mainframe knowledge, which might include many years 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 necessary function 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 consultants attain retirement age and can even appeal to new expertise fascinated with modernizing core enterprise workloads.

Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and along with interoperable purposes, guarantees as much as 5 instances deployment speeds. New enterprise capabilities resembling the flexibility to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages could be led to by conservative changes, or an entire system transformation. All of it will depend on the strategic and progress 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 vast spectrum of selections out there to modernize at a tempo that’s comfy and vital for the insurer. In the present day’s mainframe migration know-how helps this, permitting for automated, quick, and low-cost migration to the cloud. This know-how contains 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 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 danger referring to legacy expertise, improve agility and cut back prices
• Substitute: 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 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 know-how used. The appliance will depend on whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small business and enormous business. Nevertheless, there are three key steps that decide the course 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 price range constraints
   1. a. What’s the price range out there as we speak?
   2. b. What’s the period out there to comprehend 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 loads of different change occurring?

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

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

Gas the way forward for insurance coverage: Expertise modernization, resembling AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile progress each by rising revenues and reducing prices.

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