“Success today requires the agility and drive to constantly rethink, reinvigorate, react and reinvent” – Bill Gates
From the largest conglomerates and big banks to new internet companies are now adopting agile principles in their product and/or service delivery. Insurance companies across the world do not seem to have adopted agile at scale approaches with the day-to-day management of the business as big banks or other financial institutions have adopted. The reasons highlighted for using a status quo approach (the so-called “waterfall” approach) for the delivery of their services are:
Insurance firms are generally legacy businesses with acquired businesses and a combination of multiple systems used for different classes of businesses. For these firms, the value of the in-force business is significant and therefore the desire to make a completely new product is less strong as compared to say other companies where the new product or service delivery to market takes higher precedence. These products are managed by legacy IT systems and there is little value observed in making a significant change.
Insurance firms are heavily regulated and capitalised businesses and due to strong regulatory penalties in case of any non-compliance or delays in reporting or regulatory requirements. This again means a tendency to use the traditional “waterfall” approach instead of the “agile” approach where lack of experience and execution may lead to initial failures.
The staff involved in multidisciplinary teams are not professionally trained in Agile methodology and/or certification. Mainly IT staff/developers are trained in Agile but the real need is to provide professional Agile training to a wider staff and stakeholders within the company to change the mindset and create an environment of challenging each of individuals’ own laurels and standards.
Agility refers to a business’s ability to respond to change. It is an approach to succeeding in an uncertain and turbulent environment. In the day-today industry parlance, Agile is a common name used for methods based on the principles of the Agile Manifesto. Till the early 2000s, Agile principles have been used widely in software development but nowadays these principles are used almost more widely for any complex tasks that organisations are trying to achieve.
Winston W. Royce, a computer scientist is considered the father of the so-called “Waterfall” model that has been widely used in large scale software development traditionally.
The distinctive features of Agile compared to the Waterfall method are:
In the case of an insurer, it will have separate departments covering each of the activities such as:
Each of the above steps is performed one after the other and therefore this method of product development and management is a very elongated and time-consuming process involving multiple departments while stakeholders await customer needs to be met and, in some cases, the opportunities are lost.
Now consider an agile team scenario, where a small cross-functional consisting of a few actuaries and data scientists, a marketing team, software developers and claims team members who are set on delivering new products and increasing sales through various sales channels in a timebound manner. Instead of each of the teams under a water-fall approach performing their tasks in insolation and in a cascade of work that is dependent upon each other, under the agile approach they work on each of the areas in a more focussed and iterative approach with the client needs in mind at all times. This team will not only work towards launching the product but also continual maintenance of the product, collects customer feedback and improves customer experience as well. Under the agile approach, the time to market significantly reduces and this idea can be propagated into various other projects and services delivery.
A pictorial comparison of the waterfall and agile methods is outlined in Figure
Applying Agile principles to many the complex tasks works because of:
Insurers can utilise agile concepts in the following key areas:
Most companies who have adopted Agile methodologies in their day-to-day management of the business have realised notable benefits and the benefits are well-documented for banking and financial sector companies. Insurance companies, particularly general and health insurance companies, are better placed to adopt Agile principles. This is because the shorter customer cycle overall and policy duration are material lower as compared to life and pension insurance policies. It is better to make start pilot projects in various activities and /or projects and slow apply them at the enterprise level.
We recommend considering the following aspects for implementing an agile mindset within an insurance company:
SAFe is an agile framework that combines the iterative development practices of agile with the mindset of Lean thinking. Lean thinking aims at using fewer resources and eliminating waste to maximize customer value. SAFe aims at:
How AgilityPad can help you with your journey of being a SAFe Agile Organisation:
We work with our clients to implement a variety of solutions, that are tailored to their transformational needs and meets all the stated requirements. We manage their training and coaching / consulting needs in the area of agile transformation.
 Note: Winston Royce introduced the Waterfall method mainly to show how it should not be done. He was in favor of the iterative approach, in which the focus is on splitting the project into small parts and acting on these. Ironically, since then most of the projects have been executed according to the Waterfall method.