Why smart insurers are modernizing their mainframe now | Insurance Blog

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 priceless 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 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 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 surroundings bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest fee surroundings 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 must be extra agile, however have to deal with 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 potential as a result of lots 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 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 associated fee 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 price. A legacy mainframe additionally has an impression on expertise, as devoted workers shall 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 total agility, however securing a basis for essential 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 information, which may include 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 essential function the modernization of the mainframe performs in closing the abilities hole – it may well counter the issue many corporations are dealing with as their mainframe specialists attain retirement age and also can appeal to new expertise fascinated about modernizing core enterprise workloads.

Modernization additionally gives the power 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 reminiscent of the power 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 a whole system transformation. All of it will depend on the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable 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 extensive spectrum of selections out there to modernize at a tempo that’s comfy and vital for the insurer. At present’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.

When it comes to approaches, insurers can roll out the next interventions, which all fluctuate 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 danger regarding legacy abilities, improve agility and scale back prices
• Change: 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 completely with rewritten and rationalized purposes

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 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 working on the mainframe?

2. Figuring out finances constraints
   1. a. What’s the finances out there in the present day?
   2. b. What’s the length out there to appreciate ROI?

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

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

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

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