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 precious core technological perform, many legacy mainframes lack the agility to satisfy the calls for of buyer expectations and speedy 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 take a look at the market forces shaping the broader trade, 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 setting bills for insurance coverage operations and growing claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest price setting and future predicted volatility, prices want to return down, and one of many prices that’s growing 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 have to concentrate on advertising and marketing 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 present not doable as a result of quite a lot 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 in an effort 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 price perspective, the case for mainframe modernization is obvious.  The demand positioned on the insurance coverage infrastructure is growing, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and price. A legacy mainframe additionally has an affect on expertise, as devoted workers will likely be required to offer 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 threat.

Modernizing the mainframe isn’t just about total agility, however securing a basis for necessary technological transformation. In a latest report on Transforming Claims and Underwriting with AI, Accenture illustrates with widespread industry research that AI has emerged as the transformative technology and critical differentiator in the insurance industry when applied in tandem with humans. However, AI transformation is not possible if an insurer has not dismantled and updated mainframe platforms first.

Modernizing the mainframe offers some compelling benefits. By running in a less expensive environment, operating costs are drastically lowered, and the use of a more modern platform dramatically reduces platform resource costs. Together, this can result in a 40 percent reduction in operating expenses. While this savings is significant, it is not the only benefit. Most importantly, mainframe modernization – through agility, flexibility and access to critical mainframe data – has a powerful impact on business value. As a recent Accenture blog, Mainframes: The last frontier of cloud migration emphasizes, clients are capable of leverage their mainframe knowledge, which might comprise many years 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 necessary position the modernization of the mainframe performs in closing the talents hole – it could counter the issue many firms are going through as their mainframe specialists attain retirement age and can even entice new expertise serious about modernizing core enterprise workloads.

Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and together 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 will be caused by conservative changes, or an entire system transformation. All of it will depend on the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization will not be 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 accessible to modernize at a tempo that’s snug and crucial 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 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 range 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 threat regarding 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 knowledge to a brand new system to cut back complexity and prices
• Reimagine: Reimagining the enterprise fully 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 applying will depend on whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small industrial and huge industrial. Nevertheless, there are three key steps that decide the route 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 working on the mainframe?

2. Figuring out funds constraints
   1. a. What’s the funds accessible at this time?
   2. b. What’s the period accessible 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 accessible?
   3. c. Is there quite a lot of different change taking place?

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

Accenture’s insurance coverage mainframe modernization methodology will make it easier to develop a journey aligned together with your objectives. Contact us to get began.

Gasoline the way forward for insurance coverage: Know-how modernization, resembling AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile development each by rising revenues and slicing prices.

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