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Why sensible insurers are modernizing their mainframe now | Insurance coverage Weblog

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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 operate, many legacy mainframes lack the agility to satisfy the calls for of buyer expectations and fast 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 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 larger inflationary atmosphere bills for insurance coverage operations and rising claims, to the impression of the worldwide pandemic and predicted recession. With a high-interest charge atmosphere and future predicted volatility, prices want to return down, and one of many prices that’s rising 12 months over 12 months 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 have to 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 the moment not attainable as a result of a variety of that logic is embedded within the mainframe. Due to this fact, 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 as a way 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 development, 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 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 employees will probably 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 is not only about general 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 important differentiator within the insurance coverage trade when utilized in tandem with people. Nonetheless, 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 operating in a inexpensive atmosphere, 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’s not the one profit. Most significantly, mainframe modernization – by way of agility, flexibility and entry to essential mainframe knowledge – has a robust impression on enterprise worth. As a latest Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, clients are capable of leverage their mainframe knowledge, which may include many years 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 might probably counter the issue many corporations are going through as their mainframe consultants attain retirement age and can even appeal to new expertise excited about modernizing core enterprise workloads.

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Modernization additionally affords the flexibility to deploy new options, merchandise and capabilities a lot faster and along with interoperable functions, guarantees as much as 5 occasions deployment speeds. New enterprise capabilities comparable to 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 an entire system transformation. All of it will depend on the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable 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 vast spectrum of selections obtainable to modernize at a tempo that’s comfy 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 contains SaaS options, Cloud maturity and advances in migration applied sciences.

By way 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 / 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 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 knowledge to a brand new system to cut back complexity and prices
  • Reimagine: Reimagining the enterprise fully 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 appliance will depend on whether or not the insurer focuses on life and annuities, group and well being, retirement, private strains/small business and enormous business. Nonetheless, there are three key steps that decide the path of each mainframe modernization journey:

  1. Defining enterprise priorities
      • a. What are the best priorities for the enterprise?
      • b. How do these align to the important thing issues brought on by operating on the mainframe?
  1. Figuring out funds constraints
      • a. What’s the funds obtainable right this moment?
      • b. What’s the length obtainable to appreciate ROI?
  1. Figuring out capability for transformation
      • a. What’s the IT staff’s capability for transformation?
      • b. Are there assets obtainable?
      • c. Is there a variety of different change taking place?

Following this course of ends in a singular 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.


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