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 precious core technological operate, many legacy mainframes lack the agility to satisfy 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 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 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 variety of things, from greater inflationary atmosphere bills for insurance coverage operations and rising claims, to the affect 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 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 have to deal with 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 attainable as a result of loads 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 the intention 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 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 can 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 general agility, however securing a basis for necessary technological transformation. In a current 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 in a position to leverage their mainframe information, which may comprise many years of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog put up additionally illustrates the necessary function the modernization of the mainframe performs in closing the abilities hole – it could actually counter the issue many firms are going through as their mainframe consultants attain retirement age and also can entice new expertise curious about modernizing core enterprise workloads.

Modernization additionally gives the flexibility to deploy new options, merchandise and capabilities a lot faster and along side 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 information processing effectivity are additionally unlocked. These advantages could be caused by conservative changes, or an entire system transformation. All of it is determined by the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable for compressed transformations

Mainframe modernization is just not 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 decisions obtainable to modernize at a tempo that’s snug and essential for the insurer. As we speak’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 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 fashionable programming language code, utilizing (semi) automated tooling to mitigate threat referring to legacy abilities, enhance agility and scale back prices
• Exchange: Figuring out a managed service/software 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 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 appliance is determined by whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private strains/small industrial and enormous industrial. Nevertheless, there are three key steps that decide the path 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 operating on the mainframe?

2. Figuring out funds constraints
   1. a. What’s the funds obtainable right this moment?
   2. b. What’s the period obtainable to understand ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT group’s capability for transformation?
   2. b. Are there sources obtainable?
   3. c. Is there loads of different change taking place?

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

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

Gasoline the way forward for insurance coverage: Expertise modernization, resembling AI and cloud-fueled information analytics, helps insurers ship worthwhile development each by way of rising revenues and chopping prices.

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