A mainframe can either catalyze or hinder progress in a market where insurers are required to be agile and digitize at scale. In spite of the mainframe’s importance as a core technological function, many legacy mainframes are unable to keep up with rapid digital progress and changing customer expectations.

Modernizing mainframes

Through a route that is faster, better, and cheaper, insurers want to reach a digital end state and embed the enabling functions they need to perform in the cloud. The mainframe is the last mile to enabling business capabilities, reimagining the business, and driving a cloud-based operating model.

As the insurance industry is being shaped by outside forces, insurers are required to be more agile to keep pace with rapidly changing demands. This is due to a range of factors, including increased inflationary expenses and higher claim rates, as well as the impact of global pandemics and an anticipated recession. In addition, interest rates have been relatively high for many years now and future volatility is expected. With these conditions, costs need to decrease – one cost that remains costly year after year is the maintenance of mainframes at insurance companies.

Zooming in on the different insurance sectors, this need for agility manifests itself in a number of different ways. Property and Casualty (P&C) insurers not only have to be more agile, but also have to focus on marketing points of differentiation while commoditizing non-differentiators. The Life & Annuity (L&A) and Retirement industry will benefit from unlocking distribution; however, this endeavor is currently impossible because much of this logic is embedded in the mainframe. Instead, the focus here is on modernizing the mainframe so it can accommodate digital channels. Group and Retirement insurers are undergoing a compressed transformation – which means that the sector requires reimagined operations from top to bottom in order to gain a competitive advantage – with Group hurting on margins, and Retirement hurting on both margins and scale. Finally, Group and Health insurers are challenged to drive down their cost basis while growing – for example by adding a wellness layer to their offerings.

The case for mainframe modernization is clear. Today, the demand placed on the insurance infrastructure is growing rapidly, with business capabilities needs driving up MIPS usage and cost. A legacy mainframe also has an impact on talent, as someone will be required to provide maintenance and upkeep – a diminishing skill set as more and more senior employees retire from the workforce. When this happens, it becomes a considerable business risk because those skills aren’t around anymore.

Update your mainframe to be more agile and stay current with the industry trends. A recent report shows why AI is the next big thing for insurers but it won’t work without an updated mainframe.

Results of mainframe modernization

Upgrading a mainframe offers some great benefits. By running in an environment that is more affordable, operating costs are lowered dramatically, and the use of a modern platform reduces platform resource costs significantly. Combined, this can mean up to 40 percent lower operating expenses. While this savings is impressive, it is not the only benefit. It is most important that when upgrading the mainframe, organizations have access to their data and business transactions in an agile and flexible way. As one recently published article on agilemainframesblog.com points out, “Mainframes: The Last Frontier of Cloud Migration” highlights that by leveraging their mainframe data – which may hold decades of business transactions – organizations will be able to feed analytics or machine learning initiatives that offer them a competitive edge. This blog post also illustrates how the modernization of the mainframe plays an important role in solving for skills shortages – it can counter the problem many companies are facing as their mainframe experts start retiring and it can also draw new talent interested in modernizing core business workloads.

By transforming to a more modernized system, you open the door to new features, capabilities, and products. You also have access to next-generation machine learning techniques that enable faster decision-making. It all depends on the needs of your insurance agency–our experts can help you decide which modernization approach is best for you.

Compressed transformations are possible with new platforms and migration technologies

An insurer’s mainframe modernization strategy is determined by the unique market needs of the organization and its strategic intent. There are a variety of options available for modernizing at a pace that is comfortable and necessary for the organization. It includes SaaS solutions, Cloud maturity, and advances in migration technologies. The mainframe migration technology today allows for automated, fast, and low-cost migration to the cloud.

The following interventions can be deployed by insurers, which vary in scale and intensity:

Migrating an application from one platform to another without changing the programming language

Utilize Accenture’s language migration toolkit to migrate legacy to modern programming languages, using (semi-)automated tooling to mitigate legacy skills risk, increase agility, and reduce costs.

Finding a managed service/application that can provide required functionality, including extracting and migrating data to a new system to reduce complexity

Reimagine: Rewrite and rationalize all applications to completely reimagine the business

What insurance companies can do to begin modernizing their mainframes

Insurance mainframe modernization has its nuances. From business benefits to technology used, these solutions vary in intensity. It all depends on whether the insurer specializes in life and annuities, group health, retirement, personal lines and small commercials, or large commercials. The direction of any mainframe modernization journey is determined by three key steps:

Prioritizing business activities

What are the business’s highest priorities?

What are the key problems associated with running on a mainframe?

Budget constraints identification

What is today’s budget?

How long will it take to realize ROI?

Assessing transformational capacity

Is the IT team capable of transforming?

Is there a resource available?

Is there a lot of other change taking place?

This process results in a unique mainframe modernization plan.

Contact us to learn more about Accenture’s insurance mainframe modernization methodology.

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