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 operate, many legacy mainframes lack the agility to fulfill 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 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 have a look at the market forces shaping the broader business, 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 setting bills for insurance coverage operations and growing claims, to the affect 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 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 must deal with advertising 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 attainable as a result of quite a lot of 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 – which 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 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 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 affect on expertise, as devoted workers will likely be required to supply upkeep and maintenance – a diminishing skillset as an increasing number of 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 necessary technological transformation. In a latest report on Remodeling Claims and Underwriting with AI, Accenture illustrates with widespread business analysis that AI has emerged because the transformative expertise and demanding differentiator within the insurance coverage business when utilized in tandem with people. Nonetheless, AI transformation is just not attainable if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe affords some compelling advantages. By working in a cheaper setting, 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 p.c discount in working bills. Whereas this financial savings is important, it isn’t the one profit. Most significantly, mainframe modernization – by agility, flexibility and entry to crucial mainframe information – has a strong affect on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are in a position to leverage their mainframe information, which may include 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 necessary function the modernization of the mainframe performs in closing the talents hole – it may possibly counter the issue many corporations are going through as their mainframe specialists attain retirement age and can even appeal to new expertise excited by modernizing core enterprise workloads.

Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and together with interoperable purposes, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities akin to the flexibility to include AI and ML, real-time decision-making and information processing effectivity are additionally unlocked. These advantages could be led to 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 large spectrum of decisions obtainable to modernize at a tempo that’s comfy and crucial for the insurer. Right now’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 rework 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/utility 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 solely with rewritten and rationalized purposes

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 determined by whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private traces/small business and enormous business. Nonetheless, there are three key steps that decide the course 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 attributable to working on the mainframe?

2. Figuring out funds constraints
   1. a. What’s the funds obtainable at the moment?
   2. b. What’s the period obtainable to comprehend ROI?

3. Figuring out capability for transformation
   1. a. What’s the IT crew’s capability for transformation?
   2. b. Are there assets obtainable?
   3. c. Is there quite a lot of different change occurring?

Following this course of leads to 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.

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

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