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 worthwhile 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 business, 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 growing claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest price atmosphere and future predicted volatility, prices want to return 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 have to be extra agile, however have to concentrate on advertising and marketing factors of differentiation whereas commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement business will profit from unlocking distribution, a feat which is presently not doable as a result of a number 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 – which means that the sector requires reimagined operations from the bottom up with the intention 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 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 growing, with enterprise functionality wants driving up Million-Directions-Per-Second (MIPS) utilization and value. A legacy mainframe additionally has an affect on expertise, as devoted workers will likely be required to offer upkeep and maintenance – a diminishing skillset as increasingly more senior staff retire from the workforce. Down the road, this manifests as a substantial enterprise danger.

Modernizing the mainframe is not only about general agility, however securing a basis for essential technological transformation. In a latest report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread business analysis that AI has emerged because the transformative know-how and significant differentiator within the insurance coverage business when utilized in tandem with people. Nonetheless, AI transformation is just not doable if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe gives some compelling advantages. By operating in a inexpensive atmosphere, working prices are drastically lowered, and using a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this can lead to a 40 % discount in working bills. Whereas this financial savings is critical, it isn’t the one profit. Most significantly, mainframe modernization – by agility, flexibility and entry to essential mainframe information – has a robust affect 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 a long time of enterprise transactions, and use that information to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog publish additionally illustrates the essential position the modernization of the mainframe performs in closing the abilities hole – it will probably counter the issue many corporations are dealing with as their mainframe specialists attain retirement age and also can appeal to new expertise concerned about modernizing core enterprise workloads.

Modernization additionally gives 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 resembling 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 an entire system transformation. All of it is dependent upon the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable 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 extensive spectrum of selections obtainable to modernize at a tempo that’s snug and obligatory for the insurer. As we speak’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.

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 trendy programming language code, utilizing (semi) automated tooling to mitigate danger referring to legacy expertise, enhance agility and cut back prices
• Change: 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 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 know-how used. The applying is dependent upon whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private traces/small business and huge business. Nonetheless, there are three key steps that decide the route 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 operating on the mainframe?

2. Figuring out finances constraints
   1. a. What’s the finances obtainable right this moment?
   2. b. What’s the length obtainable to understand ROI?

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

Following this course of leads to a singular mainframe modernization plan.

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

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

LEARN MORE

Get the most recent insurance coverage business insights, information, and analysis delivered straight to your inbox.

Disclaimer: This content material is supplied for common data functions and isn’t meant for use instead of session with our skilled advisors.

Disclaimer: This doc refers to marks owned by third events. All such third-party marks are the property of their respective house owners. No sponsorship, endorsement or approval of this content material by the house owners of such marks is meant, expressed or implied.