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By their very nature insurance companies are large established businesses that tend to be rather rigid. As stability is crucial in the industry, many insurers find it difficult to react to short-term changes in the competitive environment. How can insurers redesign their companies to embed agility and stay ahead of the game? How can they embrace uncertainty in a volatile world? In this article I will share some of the traits and benefits of agile companies, best practice examples, and how to kick off an agile transformation.
The main goal for an agile company is to balance stability and agility with complexity and simplicity. In general, agile companies are prepared for an uncertain future, while being sophisticated enough in their response to change. Based on our analysis, we identified striking similarities of successful agile companies. Here are some of the traits they have in common:
Even though some of the traits above are hard to find in insurance firms today, examples of successful agile transformation projects do exist in the industry. The Dutch insurer ING, for instance, has introduced a leading agile organizational model. Squads (small, autonomous teams), Tribes (multiple Squads on a common mission), and Chapters (specialists, such as an IT developer) provide the necessary structure for efficient, goal-oriented transformation. Personal roles, such as Tribe Lead, Product Owner, Agile Coach, and Chapter Lead, create the right environment, define the vision, and provide support during the project.
The German SIGNAL IDUNA Group, a former craftsmen's insurance company, might also serve as an inspiration. Over the past four years, the company has conducted one of the most ambitious reorganization projects in the German insurance industry and has almost entirely introduced agile work processes in its head office. The transformation, which is already showing economic success as premium income rose from €5 to €6.1 billion in a short period, was based on the following five pillars.
In order to introduce agile methods into your daily operations, creating a trusting and highly productive work environment is essential. It is the prerequisite for insurers to change over time and respond to uncertainty in a way that aligns with who they are and who they want to be.
Based on our experience, the best way to kick off the transformation process is by simply starting with one or more agile pilot projects. Step by step, agile methods must then be checked for their usefulness in the application area. Teams must learn from the first results as well as to adapt, scale, and optimize procedures. As agile transformation is a journey and not a single event, powerful management tools, such as the “Objectives and Key Results Methodology” (OKR), must be in place to guide teams through the process.
Agile transformation revolutionizes the way business is conducted in an insurance company and prepares it for ever-changing internal factors, the competitive landscape, industry trends, and new technologies. Done right, agile approaches practically eliminate the risk of failure of the transformation. They also ensure that teams adapt to change quickly and deliver short-term value – a key success factor for innovation and survival in a rapidly changing world.