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 invaluable 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 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 take a look at the market forces shaping the broader business, 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 atmosphere bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest charge atmosphere 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 must give attention to advertising and marketing 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 potential as a result of quite a lot 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 with a view 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 price foundation, and drive development, 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 value. A legacy mainframe additionally has an impression on expertise, as devoted workers might be required to supply upkeep and maintenance – a diminishing skillset as an increasing number of senior workers retire from the workforce. Down the road, this manifests as a substantial enterprise danger.

Modernizing the mainframe isn’t just about general agility, however securing a basis for vital 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 know-how and important differentiator within the insurance coverage business when utilized in tandem with people. Nevertheless, AI transformation isn’t potential if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe affords some compelling advantages. By working in a cheaper atmosphere, working prices are drastically lowered, and using a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this can lead to a 40 p.c discount in working bills. Whereas this financial savings is important, it’s not the one profit. Most significantly, mainframe modernization – by agility, flexibility and entry to important mainframe knowledge – has a robust impression on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are capable of leverage their mainframe knowledge, which may include a long time of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog put up additionally illustrates the vital function the modernization of the mainframe performs in closing the abilities hole – it may possibly counter the issue many firms are going through as their mainframe consultants attain retirement age and may also appeal to new expertise eager about modernizing core enterprise workloads.

Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and along side interoperable functions, 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 might be led to by conservative changes, or a whole system transformation. All of it relies on the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization 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 huge spectrum of selections accessible to modernize at a tempo that’s comfy and obligatory for the insurer. Right now’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 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 remodel from legacy to trendy programming language code, utilizing (semi) automated tooling to mitigate danger regarding legacy expertise, enhance agility and cut back prices
• Change: Figuring out a managed service/software 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 totally 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 relies on whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private strains/small business and huge business. 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 funds constraints
   1. a. What’s the funds accessible at present?
   2. b. What’s the period accessible to comprehend ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT workforce’s capability for transformation?
   2. b. Are there assets accessible?
   3. c. Is there quite a lot of different change occurring?

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

Accenture’s insurance coverage mainframe modernization methodology will provide help 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 development each by rising revenues and chopping prices.

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