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 beneficial 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 need to attain a digital end-state and embed the enabling capabilities 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 variety 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 charge surroundings and future predicted volatility, prices want to return 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 should 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 trade will profit from unlocking distribution, a feat which is at present not attainable as a result of loads of that logic is embedded within the mainframe. Due to this fact, 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 to be able 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 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 evident.  The demand positioned on the insurance coverage infrastructure is rising, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and value. A legacy mainframe additionally has an impression on expertise, as devoted workers will likely 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 danger.

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

Mainframe modernization outcomes

Modernizing the mainframe affords some compelling advantages. By working in a cheaper surroundings, working prices are drastically lowered, and using a extra fashionable platform dramatically reduces platform useful resource prices. Collectively, this may end up in a 40 % discount in working bills. Whereas this financial savings is important, it isn’t the one profit. Most significantly, mainframe modernization – by means of agility, flexibility and entry to crucial mainframe information – has a strong impression 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 information, which might comprise many years of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog submit additionally illustrates the essential position the modernization of the mainframe performs in closing the abilities hole – it may possibly counter the issue many firms are dealing with as their mainframe consultants attain retirement age and can even entice new expertise involved in modernizing core enterprise workloads.

Modernization additionally affords the power to deploy new options, merchandise and capabilities a lot faster and at the side of interoperable functions, guarantees as much as 5 instances deployment speeds. New enterprise capabilities equivalent to the power to include AI and ML, real-time decision-making and information processing effectivity are additionally unlocked. These advantages may be led to by conservative changes, or a whole 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 just 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 broad spectrum of selections accessible 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 range 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 expertise, enhance agility and scale back prices
  • Substitute: Figuring out a managed service/software that may present required performance, together with extracting and migrating information to a brand new system to cut back complexity and prices
  • Reimagine: Reimagining the enterprise completely with rewritten and rationalized functions

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 applying depends upon whether or not the insurer focuses on life and annuities, group and well being, retirement, private traces/small industrial and huge industrial. Nevertheless, there are three key steps that decide the course of each mainframe modernization journey:

  1. Defining enterprise priorities
      • a. What are the very best priorities for the enterprise?
      • b. How do these align to the important thing issues attributable to working on the mainframe?
  1. Figuring out finances constraints
      • a. What’s the finances accessible as we speak?
      • b. What’s the length accessible to appreciate ROI?
  1. Figuring out capability for transformation
      • a. What’s the IT crew’s capability for transformation?
      • b. Are there sources accessible?
      • c. Is there loads of different change taking place?

Following this course of leads to 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.


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