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 useful core technological operate, 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 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 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 larger inflationary atmosphere bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest fee atmosphere 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 several methods. Property and Casualty (P&C) insurers not solely should be extra agile, however must deal with 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 presently 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 – which 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 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 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 employees shall be required to offer upkeep and maintenance – a diminishing skillset as increasingly more senior workers 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 essential 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 important differentiator within the insurance coverage trade when utilized in tandem with people. Nonetheless, AI transformation just isn’t attainable 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 atmosphere, working prices are drastically lowered, and using a extra fashionable 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’s not the one profit. Most significantly, mainframe modernization – by means of agility, flexibility and entry to crucial mainframe information – has a strong impression on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects 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 might probably counter the issue many firms are dealing with as their mainframe specialists attain retirement age and also can appeal to new expertise occupied with modernizing core enterprise workloads.

Modernization additionally affords 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 similar to the power to include AI and ML, real-time decision-making and information processing effectivity are additionally unlocked. These advantages may be caused by conservative changes, or a whole system transformation. All of it will depend 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 broad spectrum of selections out there to modernize at a tempo that’s comfy and needed for the insurer. At this time’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 range 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 fashionable programming language code, utilizing (semi) automated tooling to mitigate threat referring to legacy abilities, enhance agility and scale back prices
• Change: Figuring out a managed service/utility 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 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 know-how used. The appliance will depend on whether or not the insurer focuses on life and annuities, group and well being, retirement, private traces/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 at this time?
   2. b. What’s the length out there to understand ROI?

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

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

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

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

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