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 invaluable 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 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 take 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 increased inflationary setting bills for insurance coverage operations and rising claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest price setting 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 must be extra agile, however must give attention to advertising and marketing 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 potential as a result of a variety 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 with the intention 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 price foundation, and drive progress, 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 rising, 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 workers can be required to offer upkeep and maintenance – a diminishing skillset as increasingly more senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise threat.

Modernizing the mainframe is not only about total 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 expertise and significant differentiator within the insurance coverage business when utilized in tandem with people. Nevertheless, AI transformation shouldn’t be potential if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe presents some compelling advantages. By working in a cheaper setting, working prices are drastically lowered, and the usage of a extra fashionable platform dramatically reduces platform useful resource prices. Collectively, this may end up in a 40 p.c discount in working bills. Whereas this financial savings is critical, it isn’t the one profit. Most significantly, mainframe modernization – by agility, flexibility and entry to vital mainframe information – has a strong influence on enterprise worth. As a latest Accenture weblog, Mainframes: The final 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 put up additionally illustrates the vital function the modernization of the mainframe performs in closing the talents hole – it might probably counter the issue many corporations are dealing with as their mainframe consultants attain retirement age and can even entice new expertise fascinated about modernizing core enterprise workloads.

Modernization additionally presents the power to deploy new options, merchandise and capabilities a lot faster and along with interoperable functions, guarantees as much as 5 occasions 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 may be caused by conservative changes, or an entire system transformation. All of it depends upon the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization shouldn’t 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 selections obtainable to modernize at a tempo that’s comfy and crucial for the insurer. As we speak’s mainframe migration expertise helps this, permitting for automated, quick, and low-cost migration to the cloud. This expertise 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 remodel from legacy to fashionable programming language code, utilizing (semi) automated tooling to mitigate threat referring to 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 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 expertise used. The applying depends upon whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small business and huge business. Nevertheless, 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 brought on by working on the mainframe?

2. Figuring out price range constraints
   1. a. What’s the price range obtainable at this time?
   2. b. What’s the length obtainable to understand ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT staff’s capability for transformation?
   2. b. Are there assets obtainable?
   3. c. Is there a variety 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 along with your objectives. Contact us to get began.

Gasoline the way forward for insurance coverage: Know-how modernization, reminiscent of AI and cloud-fueled information analytics, helps insurers ship worthwhile progress each by rising revenues and reducing prices.

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