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 satisfy the calls for of buyer expectations and speedy digital progress.

The decision for mainframe modernization

Insurers wish 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 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 greater inflationary surroundings bills for insurance coverage operations and rising claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest fee 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 numerous 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 business will profit from unlocking distribution, a feat which is at present not doable as a result of quite a lot of that logic is embedded within the mainframe. Due to this fact, 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 in an effort to enhance buyer relationships and achieve 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 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 value. A legacy mainframe additionally has an affect on expertise, as devoted workers might be required to supply 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 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 demanding differentiator within the insurance coverage business when utilized in tandem with people. Nonetheless, AI transformation just isn’t doable if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe presents some compelling advantages. By working in a inexpensive surroundings, working prices are drastically lowered, and using a extra fashionable 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 – by way of agility, flexibility and entry to essential mainframe knowledge – has a robust affect on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects 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 submit additionally illustrates the vital position the modernization of the mainframe performs in closing the abilities hole – it may counter the issue many corporations are dealing with as their mainframe consultants attain retirement age and may also entice new expertise considering modernizing core enterprise workloads.

Modernization additionally presents the flexibility to deploy new options, merchandise and capabilities a lot faster and along side interoperable functions, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities similar to the flexibility to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages will 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 extensive spectrum of decisions obtainable 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 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 fashionable programming language code, utilizing (semi) automated tooling to mitigate threat referring to legacy expertise, enhance agility and scale 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 scale back complexity and prices
• Reimagine: Reimagining the enterprise totally 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 appliance will depend 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. Nonetheless, there are three key steps that decide the course 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 obtainable at the moment?
   2. b. What’s the period obtainable to understand ROI?

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

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

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

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

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