Why sensible 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. While the mainframe was as soon as a priceless core technological perform, many legacy mainframes lack the agility to satisfy the calls for of buyer expectations and fast digital progress.

The name for mainframe modernization

Insurers need 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 spread of things, from increased inflationary setting bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest fee 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 numerous methods. Property and Casualty (P&C) insurers not solely have to be extra agile, however have to give attention to 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 presently not doable as a result of numerous that logic is embedded within the mainframe. Therefore, 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. Finally, Group and Health 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 price 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-Instructions-Per-Second (MIPS) utilization and price. A legacy mainframe additionally has an impression on expertise, as devoted workers might 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 danger.

Modernizing the mainframe isn’t just about total agility, however securing a basis for vital 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, prospects are in a position to leverage their mainframe knowledge, which might 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 submit additionally illustrates the vital function 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 also entice new expertise interested by modernizing core enterprise workloads.

Modernization additionally presents the power to deploy new options, merchandise and capabilities a lot faster and at the side of interoperable purposes, guarantees as much as 5 instances deployment speeds. New enterprise capabilities corresponding to the power to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages may be caused by conservative changes, or a whole system transformation. It all is determined by the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences permit for compressed transformations

Mainframe modernization isn’t a one-size-fits-all proposition. It is pushed by the distinctive market wants of the insurer and the strategic intent of the enterprise. There is a large spectrum of decisions out there to modernize at a tempo that’s snug and obligatory for the insurer. Today’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.

In phrases of approaches, insurers can roll out the next interventions, which all differ in scale and depth:

• Re-platform: Migrating an software with out altering the programming language to a different platform / Operating 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 regarding legacy expertise, improve agility and cut back prices
• Replace: Identifying a managed service/software 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 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 know-how used. The software is determined by whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small business and huge business. However, 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 brought on by working on the mainframe?

2. Identifying price range constraints
   1. a. What is the price range out there at this time?
   2. b. What is the period out there to appreciate ROI?

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

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

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

Fuel the way forward for insurance coverage: Technology modernization, corresponding to AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile development each via rising revenues and chopping prices.

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Disclaimer: This content material is supplied for normal data functions and isn’t meant for use rather than session with our skilled advisors.

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