Technology
Recipe for Success

• Taylor Maykranz
• January 2020
• 

On the path to agility, insurers and reinsurers have increasingly turned to agile software development, which is designed to manage risk and uncertainty while controlling costs and accelerating project completion.

Since companies are implementing one segment of a portfolio at a time, they get a useable product sooner.

There are six keys to agile success that insurers and reinsurers can follow, particularly for ceded reinsurance systems.

A clear vision and priorities. The cedant, or insurer, needs a clear sense of priorities. What is the goal? How is success defined and measured? Which aspects of the cedant's insurance portfolio should be prioritized above others? Get answers upfront.

Stakeholder buy-in. Decision-makers across the entire organization, including the chief information officer and business team members, must be completely on board with the objective. They should have an active role in discussions and decision-making with the vendor and IT team throughout the project.

Adaptability and flexibility. The team must be willing and able to continually adjust to new and changing information. The vendor and insurer must work together as one team to have the flexibility to adapt to changing priorities.

Cross-functional teams. The most capable agile teams have people who can step into one another's domains. IT team members should have some business knowledge and business team members should have a basic understanding of technology. Each team member should be able to participate in the testing of various modules. A well-rounded team is a flexible team.

Consistent and open communication. A team that promotes complete transparency is crucial. No secrets. Working together as one team toward an objective starts with open and honest communication from both parties.

With other implementation methodologies, the client is expected to perfectly communicate every single requirement at the start, and the entire implementation is built around that information.

It is only at the end of such projects that the insurer is able to test the system with actual contracts and data.

It's easy to overlook small but important items. Suppose the client says: “I forgot to mention that our property catastrophe program can have a scenario where what was previously reinsured as three independent wildfires now should be reinsured as one wildfire. Because the deductible and other reinsurance clauses now apply only once against those three combined fires, we'll have a better recoverable.”

With traditional development, a problem may not be discovered until very late. By then, it might require much work to be redone, resulting in delays and cost overruns.

With its incremental delivery approach and continuous testing, agile software development helps to expose any problems or oversights early on. Course corrections are much easier to make, provided there's constant communication.

Allocation of necessary resources. Bandwidth is a problem in most implementations. The more dedicated bandwidth from insurance staff who are knowledgeable about business processes, the better.

An agile implementation requires consistent involvement from the carrier's team members on the client's side throughout the course of the entire implementation. There is no substitute.

If a project is part of a broader initiative to transform the business, a consistent implementation methodology may be paramount, ruling out agile.

For virtually all other software projects, agile is a fast, safe and cost-effective method if insurers and reinsurers follow these guidelines.

Best’s Review contributor Taylor Maykranz is a certified agile scrum master and vice president of implementation services at Prima Solutions USA (formerly Effisoft USA), an international reinsurance software vendor in Coral Gables, Florida. She can be reached at bestreviewcomment@ambest.com.