Agile insurance: Lessons from leaders of Greek insurer Interamerican

Interamerican (IAG), part of ACHMEA Group since 2001, has reinvented itself more than once in its history of more than 50 years as a leading insurer in Greece. What started as a life insurer has grown to become one of the country’s leading property and casualty insurers. Even amid the Greek financial crisis, the company pioneered direct-channel sales and services in Greece and Cyprus through its digital brand.

In 2018, IAG set out to completely change the way it worked, embarking on a full-scale agile transformation to reshape its organization and governance around cross-functional design tribes and delivery teams. It has now become a leading agile player in the Greek insurance industry.

The ambition of IAG CEO Yiannis Kantoros was to unlock the potential and leadership of every employee to turn IAG into a company that dealt with complexity more intelligently and flexibly. Four years after beginning its transformation, IAG reached an operating state involving autonomous teams, bottom-up initiatives and decision making, less hierarchy, and more radical transparency. Kantoros and IAG COO Vincent Teekens sat down with McKinsey to discuss how IAG is working to confront priority issues such as sustainability and global uncertainty while delivering on its mission to have a positive impact on Greek society.

The need to transform—and the risks of transformation

McKinsey: What was the need for this transformation?

Yiannis Kantoros: First was the realization that the insurance industry was becoming digital and that our structures, processes, and organizational skills were not fit for the job.

Then at a second, and maybe deeper, level, we needed to fully address and correct for the effects of the Greek financial crisis evident in the lives of people and in the performance of businesses in the decade after 2009. Underpinning this effort were my sense that we could do better and our belief in the power of many to collectively improve things in an era where there was a lot of misery and pessimism in Greek society and our business world.

Finally, I simply wanted IAG to help give our employees a focus and purpose. I wanted to build an organization that utilized talent.

McKinsey: Beyond those broad imperatives, what was the specific need for IAG to transform?

Yiannis Kantoros: We needed the organization to be less mechanical and more organic in manner; if we could achieve this, then I knew it could adapt faster than it could in a more hierarchical situation. It all comes down to the ability to change faster and to know what represents the proportion of top-down or bottom-up change. And this connects to the bigger picture because this form of transformation is much needed in the Greek context.

Vincent Teekens: Yes, hierarchy was limiting our decision-making speed just as our customers’ needs were changing rapidly. Our ability to quickly make decisions was also limited by the need to work across silos in the organization; this prevented a free flow of information and led to friction in decision making.

The hierarchical structure also presented a challenge to the organization’s young talent; each person felt they could not make the impact they would like to make because they needed time to grow in the hierarchy first. It was clear that, as a company, we would need all the human potential in our organization to interact within a complex and volatile environment. But we were not doing so: our hierarchical setup and decision-making mechanisms were holding us back.

McKinsey: What, then, were the risks in launching this transformation?

Yiannis Kantoros: I know that any leader within the organization—not just me—who commits to an agile transformation makes a personal bet on his or her own career. And all these risks and their intensity are also closely linked to the overall market environment and the company’s starting position. A highly volatile environment can increase the overall transformation risk, whereas in a well-performing organization, the risk of failure is costlier. We were very much in the latter category.

IAG’s transformation experience

McKinsey: Many say that agile methodology has become the new normal. How was this transformation different from other transformation attempts, particularly in Southern Europe?

Vincent Teekens: For us, becoming agile was never a goal in and of itself. We wanted to build a workplace in which people are empowered to use their full potential—and through that to become an organization that deals with complexity in a faster and more intelligent manner.

We used agile because it offers a framework that fits this purpose, but we mainly spoke about agility and empowerment as the way to deliver on our purpose. This also meant that the transformation went further than just implementing agile techniques as a way of delivering change, which is what many organizations have done. We used the transformation to redefine autonomy, initiative, and decision making throughout the whole organization, including our own role as an executive team.

Also, for Greece, these ways of working were fairly new when we started. To my knowledge, in Greek culture, such a reversal of the hierarchical pyramid had never been done. We had some examples from our parent organization in the Netherlands where agile ways of working had been implemented, but this was new for us. And, despite our conviction, also a bit scary. Would this idea of reducing horizontal and hierarchical silos and turning every employee in the organization into a self-propelling leader really work in our culture? What would it look like?

The challenge of transforming

McKinsey: As a leader, how did you take up the challenge of transforming the organization?

Yiannis Kantoros: The idea was to work as a team to implement this transformation. It proved more difficult than I initially anticipated. For example, we had to change two out of the six members of our executive team since we could not align on the idea and the process that followed. And then we had to look deep into the organization to create an alliance of motivated colleagues to support us and create our first ambassadors. Trusting each other, deciding in an inclusive manner, and creating impact through dialogue rather than using corporate power were fundamental to the acceptance of the change. In addition, implementing through different waves of organizational redesign helped us to stay in control. Of course, this typically brings about changes in some, but by no means all, of our people. There are cycles of progress. But my intent was to always keep forward motion.

McKinsey: What was the philosophy behind the transformation itself?

Vincent Teekens: In the earlier phases of the transformation, we defined our mission and vision, aligned the top team, and invested in the necessary innovation and agile skills throughout the organization. We shared the belief that the key to success was the unlocking of the potential of all. Based on this, we defined three transformation principles:

We would build an organization that senses and responds like an organism, keeping decision making as close to our customers as we can.

We would need less hierarchy and more teamwork, embracing a way of working that gives our people freedom to learn by testing—to think, to grow, and to contribute to our shared ambitions and goals.

And we would integrate business with IT to enable teams not just to decide what they feel is important but also to deliver.

We started working on governance in parallel with designing the future state of the organization, spending time to understand how our principles would translate into decision-making processes. The agile approach incorporates a tribe framework for the change-oriented parts of the company, and having multidisciplinary squads that could independently decide and deliver was essential. For service delivery, we stuck to a more traditional structure but much less hierarchical than it was previously. Finally, we set up a governance model based on the autonomy of teams to make decisions.

McKinsey: No transformation is successful without significant change management. What cultural barriers did IAG run up against, and how did you solve for them?

Vincent Teekens: We believe that the values on which we based our transformation—equality, teamwork, and autonomy—are attractive to many people, independent of their cultural or corporate background. Initially, we did meet several attitudes that could limit the ability to transform. There was some skepticism about the true beliefs of leadership, especially given that, to that point, we had spoken about our values a lot and had implemented agile as a set of delivery rituals mainly in our IT environment, but we had not fundamentally changed the company. This led people to believe this was just another “management story” that would not result in a fundamental change.

Yiannis Kantoros: This perception was amplified by the belief that the new way of working could not be achieved in a Greek environment, which would be too hierarchical, traditional, and unattuned to individual initiative and responsibility.

What helped a lot in changing attitudes was the true conviction we had and the principles we believed in. We were true to these principles during the change process, in which future leaders designed their areas in multidisciplinary teams, delivering in an agile sprint rhythm. We had determined some structural items, such as working in tribes in some areas and not in others, but within these boundaries, there was room for ownership and a real mandate to design. In this way, a large group of people started owning the change, and at the same time, we all got a better understanding of what it would be like to work in a different manner.

Vincent Teekens: For the largest group of employees, the placement process was a game changer. Everybody had to apply for a job and was assessed in discussions with colleagues. The assessment was done purely based on attitudes; we assumed everybody had the right professional skills. So as an employee, you were not just applying but also assessing. After this, leaders came together in hiring committees, selecting people for the teams of their colleagues but not for their own team. This process really changed attitudes toward the transformation, significantly reducing skepticism and instilling trust.

The impact of the transformation

McKinsey: What was the transformation’s impact on business planning and decision making?

Vincent Teekens: Our key agile rituals are now set up on different levels—strategic, tactical, and operational—and deal with planning, business performance, and the delivery of change. Every ritual has a purpose and an outcome. Through the rituals—and the transparency that comes with them—the executive team can intervene when necessary but rarely does. This setup has not only allowed teams to be faster and more autonomous but also freed up time for the executive team to focus on strategy and stakeholders.

McKinsey: And the impact on IAG?

Yiannis Kantoros: It’s clear now that IAG has become a less hierarchical place to work. Our people seem happier and more engaged, our productivity is higher, and it was relatively easy for us to steer through the pandemic. Our KPIs speak for themselves: gross written premiums increased by more than 6 percent in one year—2020 to 2021—and administrative expenses decreased by 1.2 percent in the same period. Agents and brokers have also reported higher satisfaction.

We’re also seeing a lot of interest from business leaders in learning more about our transformation, either through hosting visits to our premises or explaining our story at business congresses. And on a personal level, I now spend less time on day-to-day issues and therefore have more energy and focus for strategic matters.

Our people seem happier and more engaged, our productivity is higher, and it was relatively easy for us to steer through the pandemic.

Yiannis Kantoros

Lessons learned

McKinsey: What did you learn from this experience, and what remains to be done?

Vincent Teekens: We learned that apart from designing an organizational structure, attention needs to go to setting up governance that reflects your desired principles. We learned that trust and transparency go hand in hand: both are needed to succeed. And we also learned—and initially underestimated—the importance of the leadership team actively discussing strategic context and connecting people to the company’s mission and identity.

As a next step, I think it is important for us to work on the areas that were not transformed quite as fundamentally in the earlier waves, such as service delivery. In these areas, we did make big steps in reducing the number of organizational layers and becoming less hierarchical in decision making, but we have yet to design them in a manner that allows teams to change autonomously. Here, we need to take the next step to make sure that we live our principles throughout the whole company.

Yiannis Kantoros: I think we created a new paradigm for the Greek business community. Employees and customers are happier, and financial performance has also been excellent. What’s more, this organization now seems far more adaptive to change. Clearly, the next step would be to win the race for talent: attracting and developing young employees will be decisive in our future success.

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