Why smart insurers are modernizing their mainframe now

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 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 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 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 increased inflationary surroundings bills for insurance coverage operations and growing claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest price surroundings 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 several methods. Property and Casualty (P&C) insurers not solely must be extra agile, however have to give attention to 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 present not doable as a result of loads 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 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 associated 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 obvious.  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 might 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 danger.

Modernizing the mainframe isn’t just about general agility, however securing a basis for necessary 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 expertise and significant differentiator within the insurance coverage business when utilized in tandem with people. Nevertheless, AI transformation isn’t doable if an insurer has not dismantled and up to date mainframe platforms first.

Mainframe modernization outcomes

Modernizing the mainframe provides some compelling advantages. By operating in a inexpensive surroundings, 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 % 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 knowledge – 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 knowledge, which might comprise many years of enterprise transactions, and use that knowledge to feed analytics or machine studying initiatives that may ship aggressive benefit. The weblog submit additionally illustrates the necessary position the modernization of the mainframe performs in closing the talents hole – it might probably counter the issue many corporations are going through as their mainframe consultants attain retirement age and also can entice new expertise thinking about modernizing core enterprise workloads.

Modernization additionally provides the power to deploy new options, merchandise and capabilities a lot faster and at the side of interoperable purposes, 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 knowledge processing effectivity are additionally unlocked. These advantages could be caused by conservative changes, or a whole system transformation. All of it relies on the strategic and progress priorities of the insurance coverage enterprise.

New platforms and migration applied sciences enable for compressed transformations

Mainframe modernization 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 obligatory for the insurer. At this time’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 fluctuate 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 referring to legacy abilities, improve agility and scale back prices
  • Exchange: Figuring out a managed service/software that may present required performance, together with extracting and migrating knowledge to a brand new system to scale back complexity and prices
  • Reimagine: Reimagining the enterprise totally 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 relies on whether or not the insurer makes a speciality of life and annuities, group and well being, retirement, private strains/small business and enormous business. Nevertheless, 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 attributable to operating on the mainframe?
  1. Figuring out finances constraints
      • a. What’s the finances obtainable at this time?
      • b. What’s the period 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 loads of different change occurring?

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

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


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