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 priceless 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 features 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 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 atmosphere bills for insurance coverage operations and growing claims, to the affect of the worldwide pandemic and predicted recession. With a high-interest fee 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 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 presently not potential as a result of a whole lot of that logic is embedded within the mainframe. Due to this fact, the main target 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 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 fee 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 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 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 vital technological transformation. In a latest report on Reworking Claims and Underwriting with AI, Accenture illustrates with widespread trade analysis that AI has emerged because the transformative expertise and demanding differentiator within the insurance coverage trade when utilized in tandem with people. Nevertheless, AI transformation shouldn’t be potential if an insurer has not dismantled and up to date mainframe platforms first.

Modernizing the mainframe gives some compelling advantages. By working in a cheaper atmosphere, working prices are drastically lowered, and the usage of a extra trendy platform dramatically reduces platform useful resource prices. Collectively, this may end up in a 40 % discount in working bills. Whereas this financial savings is critical, it’s not the one profit. Most significantly, mainframe modernization – by means of 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 capable of leverage their mainframe knowledge, which may include a long time 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 vital function the modernization of the mainframe performs in closing the talents hole – it may counter the issue many firms are dealing with as their mainframe specialists attain retirement age and also can appeal to new expertise all for modernizing core enterprise workloads.

Modernization additionally gives the flexibility to deploy new options, merchandise and capabilities a lot faster and together with interoperable functions, guarantees as much as 5 instances deployment speeds. New enterprise capabilities corresponding to the flexibility to include AI and ML, real-time decision-making and knowledge processing effectivity are additionally unlocked. These advantages might be caused 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 shouldn’t 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 vast spectrum of selections obtainable to modernize at a tempo that’s comfy and obligatory for the insurer. At present’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 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 remodel from legacy to trendy programming language code, utilizing (semi) automated tooling to mitigate threat referring to legacy abilities, improve agility and cut back prices
• Exchange: Figuring out a managed service/utility 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 completely 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 expertise used. The applying is dependent upon whether or not the insurer focuses on life and annuities, group and well being, retirement, private traces/small business and huge business. Nevertheless, 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 finances constraints
   1. a. What’s the finances obtainable immediately?
   2. b. What’s the period obtainable to understand ROI?

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

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 together with your objectives. Contact us to get began.

Gas the way forward for insurance coverage: Expertise modernization, corresponding to AI and cloud-fueled knowledge analytics, helps insurers ship worthwhile progress each by means of rising revenues and reducing prices.

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

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