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 capabilities they should carry out within the cloud utilizing a route that’s quicker, 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 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 spread of things, from larger inflationary atmosphere bills for insurance coverage operations and growing claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest price atmosphere and future predicted volatility, prices want to come back down, and one of many prices that’s growing 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 concentrate on 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 the moment not doable as a result of a number 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 – that means that the sector requires reimagined operations from the bottom up with a view 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 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 evident.  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 influence on expertise, as devoted employees will likely be required to supply upkeep and maintenance – a diminishing skillset as increasingly senior workers 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 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, prospects are capable of 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 necessary position the modernization of the mainframe performs in closing the talents hole – it will possibly counter the issue many firms are dealing with as their mainframe consultants attain retirement age and can even appeal to new expertise thinking about modernizing core enterprise workloads.

Modernization additionally gives the power 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 equivalent to the power to include AI and ML, real-time decision-making and information processing effectivity are additionally unlocked. These advantages may be led to by conservative changes, or an entire system transformation. All of it relies on the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable 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 extensive spectrum of decisions accessible to modernize at a tempo that’s comfy and essential 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 consists of 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 rework from legacy to trendy programming language code, utilizing (semi) automated tooling to mitigate danger referring to legacy abilities, enhance agility and cut back prices
• Substitute: Figuring out a managed service/software that may present required performance, together with extracting and migrating information to a brand new system to cut back complexity and prices
• Reimagine: Reimagining the enterprise completely 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 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. Nonetheless, 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 attributable to working on the mainframe?

2. Figuring out price range constraints
   1. a. What’s the price range accessible immediately?
   2. b. What’s the length accessible to understand ROI?

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

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

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

Gas the way forward for insurance coverage: Expertise modernization, equivalent to AI and cloud-fueled information analytics, helps insurers ship worthwhile development each via rising revenues and slicing prices.

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