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 perform, many legacy mainframes lack the agility to fulfill the calls for of buyer expectations and fast digital progress.

The decision for mainframe modernization

Insurers wish 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 variety of things, from greater 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 numerous methods. Property and Casualty (P&C) insurers not solely should be extra agile, however have to give attention to advertising factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement trade will profit from unlocking distribution, a feat which is presently not doable as a result of numerous 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 to be able 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 fee foundation, and drive progress, 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 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 workers will likely be required to supply upkeep and maintenance – a diminishing skillset as increasingly more senior workers retire from the workforce. Down the road, this manifests as a substantial enterprise danger.

Modernizing the mainframe isn’t just about general agility, however securing a basis for necessary technological transformation. In a latest report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative expertise and demanding differentiator within the insurance coverage trade when utilized in tandem with people. Nonetheless, AI transformation isn’t doable if an insurer has not dismantled and up to date mainframe platforms first.

Mainframe modernization outcomes

Modernizing the mainframe affords some compelling advantages. By operating in a cheaper atmosphere, working prices are drastically lowered, and using a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this can lead to a 40 % discount in working bills. Whereas this financial savings is critical, it’s not the one profit. Most significantly, mainframe modernization – via agility, flexibility and entry to essential mainframe knowledge – has a robust influence on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are in a position to leverage their mainframe knowledge, which might include many years of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog publish additionally illustrates the necessary position the modernization of the mainframe performs in closing the abilities hole – it might counter the issue many corporations are dealing with as their mainframe specialists attain retirement age and can even appeal to new expertise focused on modernizing core enterprise workloads.

Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and together with interoperable functions, guarantees as much as 5 occasions 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 may be led to by conservative changes, or a whole system transformation. All of it is dependent upon the strategic and progress 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 huge spectrum of decisions obtainable to modernize at a tempo that’s snug and needed for the insurer. Immediately’s mainframe migration expertise helps this, permitting for automated, quick, and low-cost migration to the cloud. This expertise 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 differ in scale and depth:

• Re-platform: Migrating an utility 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 trendy programming language code, utilizing (semi) automated tooling to mitigate danger referring to legacy abilities, improve agility and scale back prices
• Exchange: Figuring out a managed service/utility that may present required performance, together with extracting and migrating knowledge 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 is dependent upon whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private strains/small industrial and enormous industrial. Nonetheless, there are three key steps that decide the course 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 price range constraints
   1. a. What’s the price range obtainable as we speak?
   2. b. What’s the length obtainable to comprehend ROI?

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

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

Accenture’s insurance coverage mainframe modernization methodology will aid you develop a journey aligned along 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 progress each via rising revenues and reducing prices.

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