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Tuesday, April 16, 2024

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 useful core technological operate, 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 sooner, 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 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 atmosphere bills for insurance coverage operations and rising claims, to the influence of the worldwide pandemic and predicted recession. With a high-interest charge atmosphere 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 several methods. Property and Casualty (P&C) insurers not solely should be extra agile, however must deal with 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 potential as a result of a number 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 – which 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 development, 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 rising, 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 supply upkeep and maintenance – a diminishing skillset as increasingly senior workers 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 vital technological transformation. In a current report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative know-how and demanding differentiator within the insurance coverage trade when utilized in tandem with people. Nonetheless, AI transformation will not be potential if an insurer has not dismantled and up to date mainframe platforms first.

Mainframe modernization outcomes

Modernizing the mainframe provides some compelling advantages. By working in a inexpensive atmosphere, working prices are drastically lowered, and the usage of a extra fashionable platform dramatically reduces platform useful resource prices. Collectively, this can lead to 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 agility, flexibility and entry to essential mainframe information – has a strong influence on enterprise worth. As a current Accenture weblog, Mainframes: The final frontier of cloud migration emphasizes, prospects are capable of leverage their mainframe information, which might include many years of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog put up additionally illustrates the vital position the modernization of the mainframe performs in closing the talents hole – it may counter the issue many firms are dealing with as their mainframe consultants attain retirement age and may appeal to new expertise focused on modernizing core enterprise workloads.

Modernization additionally provides the flexibility to deploy new options, merchandise and capabilities a lot faster and along side interoperable functions, guarantees as much as 5 instances deployment speeds. New enterprise capabilities comparable to the flexibility 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 an entire system transformation. All of it is dependent upon the strategic and development priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable for compressed transformations

Mainframe modernization will not be 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 huge spectrum of selections obtainable to modernize at a tempo that’s comfy and essential for the insurer. In the present day’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.

By way of approaches, insurers can roll out the next interventions, which all range 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 regarding legacy abilities, enhance agility and scale back prices
  • Exchange: 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 totally 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 know-how used. The appliance is dependent upon 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 course 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 attributable to working on the mainframe?
  1. Figuring out finances constraints
      • a. What’s the finances obtainable at the moment?
      • b. What’s the length obtainable to comprehend ROI?
  1. Figuring out capability for transformation
      • a. What’s the IT staff’s capability for transformation?
      • b. Are there sources obtainable?
      • c. Is there a number of different change taking place?

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

Accenture’s insurance coverage mainframe modernization methodology will enable you to develop a journey aligned along with your objectives. Contact us to get began.


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