Can Business Agility transform the insurance sector?

The benefits, challenges, and results of applying Business Agility in insurance

Many of us still associate the agile mindset with fast-moving tech startups. However, business agility is not exclusive to these companies; even the insurance sector, traditionally seen as conservative, stands to gain significantly from its implementation. That said, only those willing to reorganize teams, invest in them, and connect silos to work transversally—primarily between business and technology—will reap the benefits.

Business Agility: Where does it come from? What are its results?

In 1994, the Standish Group published the Chaos Report, which revealed that only 16.2% of software development projects were completed on time and within budget due to their increasing complexity. Since then, the business world has sought alternative management approaches to traditional project management models (e.g., waterfall projects).

This search led to the birth of Agile development in 2001 (later evolving into Agile 2) and a host of frameworks and Lean approaches to optimize technological or business processes, such as Lean IT and Kanban. These new ways of working have been applied with varying degrees of success. Early adopters, already inclined toward change, generally found success. However, replicating these approaches in organizations with less flexible mindsets has often yielded less favorable results.

Looking at the current landscape, the 17th edition of the State of Agile Report (2023) reveals that while only 44% of organizations find that business agility works well or very well (with even lower rates among large corporations), significant benefits have been observed, such as improved collaboration and better alignment with business needs.

While these success rates are not overwhelming, and the path is not easy, there is currently no clear alternative to Business Agility that offers comparable benefits in terms of adaptability and responsiveness to change. Achieving these results requires not only adopting agile practices but also fostering a culture that supports and sustains these changes to avoid repeating past mistakes, such as those made when introducing emerging technologies like AI.

How is Business Agility progressing in the insurance sector?

This is where we pause to examine the growing number of insurtech companies reinventing the insurance industry with technology and AI innovation. These startups are increasingly pressuring large and medium-sized traditional companies to partner with them or change their business models to compete with these new players.

Modern customers seek alternatives to traditional policies, new platforms with chatbots, and simple, connected, and smart ways to file claims and request assistance. They want streamlined services and speed—not just as customers but also when choosing where to work.

Generation Z and Millennials prefer workplaces that challenge them and prioritize innovation, collaboration, and self-organization.

This brings us to another challenge: a company that lacks innovation is unlikely to attract curious, visionary talent. Without such talent, pioneering the best solutions and staying ahead of the competition becomes challenging. Therefore, leadership positions take on even greater importance as agents of change, promoting a new work mindset throughout the organization.

In Spain, many large, traditional insurance companies have taken action in recent years, moving toward Business Agility (most commonly by implementing the Scrum framework) to avoid obsolescence and continue attracting customers—and talent. These companies have reported benefits such as:

• A 48% increase in new customer acquisition through digital channels.
• A roughly 50% reduction in time-to-market.
• A 10-15% reduction in development costs.
• A 20% increase in customer satisfaction.

What conclusions can we draw?

While there’s no magic formula, it’s evident that companies have not achieved business agility simply by adopting roles and ceremonies. It requires adopting a new way of organizing work, which necessitates breaking down silos and working transversally.

We know that 56% of companies still find no benefits in their attempts to achieve business agility. This is because it’s not simple, nor are there shortcuts. Overcoming resistance to change, raising awareness, and securing leadership commitment are essential.

Abandoning a control-oriented culture is crucial, as is being willing to reorganize teams and invest in them. It’s important to recognize that every company is now, in essence, a software development company, where the traditional divide between business and technology makes less and less sense.