Why good 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 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 have 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 greater inflationary setting bills for insurance coverage operations and growing claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest charge setting and future predicted volatility, prices want to come back down, and one of many prices that’s growing 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 have to be extra agile, however must deal with 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 at present not doable 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 as a way 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 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 can be required to offer upkeep and maintenance – a diminishing skillset as increasingly senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise threat.

Modernizing the mainframe isn’t just about total agility, however securing a basis for essential technological transformation. In a current report on Remodeling 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 is just not doable 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 trendy platform dramatically reduces platform useful resource prices. Collectively, this may end up in a 40 % discount in working bills. Whereas this financial savings is critical, it’s not the one profit. Most significantly, mainframe modernization – by agility, flexibility and entry to essential mainframe knowledge – has a robust influence on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are in a position to leverage their mainframe knowledge, which may include a long time of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog put up additionally illustrates the essential position the modernization of the mainframe performs in closing the abilities hole – it could possibly counter the issue many firms are dealing with as their mainframe specialists attain retirement age and may entice new expertise fascinated by modernizing core enterprise workloads.

Modernization additionally presents 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 akin to the power to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages could be caused by conservative changes, or a whole system transformation. All of it is determined by the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit 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 out there to modernize at a tempo that’s comfy and vital for the insurer. At present’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 rework from legacy to trendy 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 knowledge to a brand new system to cut back complexity and prices
• Reimagine: Reimagining the enterprise totally 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 expertise 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. Nonetheless, there are three key steps that decide the route 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 attributable to working on the mainframe?

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

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

Accenture’s insurance coverage mainframe modernization methodology will provide help to develop a journey aligned along with your targets. Contact us to get began.

Gasoline the way forward for insurance coverage: Expertise modernization, akin to AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile progress each by rising revenues and slicing prices.

LEARN MORE

Get the newest insurance coverage trade insights, information, and analysis delivered straight to your inbox.

Disclaimer: This content material is offered for common info functions and isn’t supposed for use instead of session with our skilled advisors.

Disclaimer: This doc refers to marks owned by third events. All such third-party marks are the property of their respective house owners. No sponsorship, endorsement or approval of this content material by the house owners of such marks is meant, expressed or implied.