The insurance industry has seen a boost in life insurance savings products in recent years. To take advantage of market tailwinds, insurers need to modernize their core systems. Core modernization has historically been delayed due to the stringent governance and risk requirements of life insurance savings products, as well as the need for careful management based on mathematical balance sheet provisions that have to be accounted for individually. However, given the positive results from the move to cloud in other insurance segments, and fueled by growing demand and increased competition, many institutions are deciding to act. They have started to migrate their mainframe environments to the cloud to be able to adopt AI and automation tools that provide competitive advantages.
The use of mainframes was at its height several decades ago, when the state of technology at the time justified entrusting the core to this type of monolithic infrastructure. However, technological innovations in recent years have completely changed the landscape, and arguments in support of the mainframe have now become little more than myths.
Cloud-based modernization
Today, the cloud offers a number of advantages, including greater business agility and a considerable reduction in the cost of maintaining the entire infrastructure. We estimate that modernizing a monolithic environment can result in infrastructure and operational savings of between 50% and 75% of costs.
Our latest paper Mainframe modernization in life insurance savings offers a guide for insurers wanting to transition from outdated mainframe systems to agile, cloud-based environments. It provides an overview of the key phases of GFT’s Mainframe Modernization Customer Journey methodology:
- Awareness
- Research
- Evaluation
- Adoption
- Operation
The modernization of the insurance core should not be seen as a single goal, but as a journey: the rapid evolution of technology as well as changes in the insurance market mean that modernization is an ongoing process.
The transformation towards open systems and cloud environments must provide the ability to evolve with the market, both functionally and technologically. The method that we deploy at GFT aims to provide organizations with the flexibility and agility necessary to continue evolving at speed, something that is virtually impossible in a monolithic environment.
Life insurance savings: the last frontier
The success achieved by the insurance sector in modernizing its monolithic environments in less complex insurance segments has created the strongest incentive to cross the final frontier: migrating the core of life savings insurance to the cloud.
But while migrating the core to a standard market solution may be a good option for other insurance segments, it is not the case for most life insurance savings companies. The solutions available on the market are not easily able to accommodate the complexity of code and applications that the life insurance savings segment requires.
We advocate an à-la-carte approach which allows hybrid solutions to be deployed. This is particularly suitable for insurers reluctant to fully migrate to a cloud environment due to the nature of the sensitive personal data they handle. Our experience means that this approach, which is more inclined towards an on-premise environment, does not miss out on the flexibility and agility that open environments bring with them. We encourage you to read our white paper to discover eight different approaches to modernization.
Breaking this final frontier provides life insurance savings with the opportunity to leverage the decades of data stored on mainframes to enrich the machine learning and predictive analytics processes that cloud computing brings. At the same time, insurers close skills gaps, attracting new talent in the most innovative technologies and opening the possibility for upskilling in existing IT areas.
Ready to cross the final frontier?
