Eliminating Gaps Between Business and IT in Insurance Through Requirements Management

If you work in business or IT teams in the insurance or finance sector, you may have faced this gap: The business team asks for a small change to a rating or underwriting rule, the IT team implements it, and a few days later, the policy system starts behaving differently than expected.

This gap generally arises when business teams discuss products, coverage, and filings, while IT teams require precise logic and system behavior. These “small” misses add up to stalled growth and mounting operational risk.

Your team is not the only one that faces these gaps. These gaps are common, and the Ovum survey, which shows only 27 percent of insurers considered their projects successful, is proof of that.

In this blog, we explain why these gaps persist, what they cost insurers, and how insurance requirements management helps business and IT stay aligned.

Real Cost of Business-IT Gaps While Building Insurance Products

At Modern Requirements, our sales team talks with multiple insurers every month, and 80% of them are facing the following common challenge:

• Business and IT operate on different definitions of “done”: The main challenge is that business and IT teams work at different abstract levels. Business teams write requirements in terms of outcomes; on the other hand, IT teams need clear user stories with acceptance criteria to implement any feature or change. When these regulatory terms are not interpreted properly, the IT team ends up implementing something else.
• Approvals occur without shared clarity: From multiple insurers, we learn that their product change reviews are conducted via emails or spreadsheets. As multiple teams don’t have shared clarity, approvals move forward without a single, agreed-upon understanding of rules, dependencies, and downstream impact.
• Regulatory compliance exposure: Compliance teams write down what rules to follow, but when those rules are not discussed properly with IT teams or converted into actionable work items, the final product never meets regulatory standards like DORA.
• Lack of traceability during audits and filings: Teams struggle to trace back who proposed and implemented the feature, whether compliance is followed, and how tests are executed while preparing audit reports.
• Trust erodes between teams: When there is a gap in understanding requirements, a trust issue happens between both teams. Business teams might feel that IT missed requirements, and IT teams might feel that the requirements were never clear.

The real cost of these challenges is not just project delays; it goes beyond that. Over time, these challenges introduce rework, increase delivery cost, and slow time to market. In some cases, insurers might need to pay hefty penalties to regulatory bodies for missing compliance.

Case example: When requirements misalignment turns into financial loss

A well-known example is the failed core underwriting system project at Co-operative Insurance in the UK. IBM was contracted to deliver the platform, but the project collapsed after years of delays and missed expectations. The court later ruled that failures in scope control, governance, and delivery alignment led to losses exceeding £80 million.

These outcomes are not rare. They are the predictable result of weak requirements discipline in complex insurance environments.

How Requirements Management Can Fill This Missing Link Between Business and IT

When insurance teams follow a disciplined requirements management process, business and IT teams stop relying on interpretation and start relying on shared, written requirements that guide decisions from approval to production. Furthermore, insurance requirements management totally changes how insurance teams operate, and we listed some benefits here:

• Shared understanding of product features: Both the business and IT teams can have a single source of information for requirements. So, instead of working based on opinions, they start working on actual facts.
• Meaningful approvals: Generally, requirements reviews and approvals happen in silos. So, it might happen that different teams might see different versions of requirements. However, with a proper requirements management process in place, teams can collaboratively review requirements. Everyone on the team can see the latest version, track what’s changed, who changed it, and then approve requirements.
  • Early impact visibility: A small change in any single requirement can affect multiple requirements and introduce rework or bugs in IT systems. However, with requirements management, teams can trace dependencies and understand their effects before development starts.
  • System-ready compliance: Regulations guidelines explain what rules to follow, but not in terms of an implementation checklist. Product teams can translate it into the implementation checklist, acceptance criteria, and collaboratively review them with compliance teams and pass them to IT teams for development. This ensures that the product is industry-compliant and regulatory behavior is reflected in the system.
  • Controlled change handling: IT software in the insurance industry evolves continuously. Teams might need to make changes based on new compliance requirements or user feedback. When requirements are managed centrally, changes are tracked with history and rationale. Teams know what changed, why it changed, and what must be retested. Drift over quarters is avoided.
• Structured documentation, not after-the-fact records: Requirements management for financial institutions encourages insurance teams to document everything from the start, not rush after delivery. It captures business rules, assumptions, approvals, and changes in one place. This creates a reliable reference that survives team changes, vendor handovers, and long delivery cycles.

For insurers, requirements management becomes the control point that keeps intent, systems, and compliance moving together.

Real-World Scenarios Where Requirements Management Closes the Gap

Solvency II internal model update

Consider that the insurer updates its internal model ahead of a supervisory review under Solvency II. On the other hand, actuarial teams also revise assumptions, but IT systems apply older data rules in rating and reporting.

However, with proper requirements management, each assumption can be captured as a requirement and linked to data sources, calculations, documents, and tests. Furthermore, IT teams always implement updated and approved requirements, reducing back-and-forth. During the review or audit, the insurer can show that systems were built by keeping compliance in mind.

DORA-driven resilience and incident readiness

A European insurer prepares for DORA compliance and must prove ICT resilience for policy and claims platforms. Without structured requirements, resilience tests, incident workflows, and third-party controls are scattered.

Requirements management for insurance products ties DORA obligations to system scenarios, test evidence, and vendor SLAs. When auditors ask how critical services are protected and tested, teams can respond with traceable proof instead of manual explanations.

How a Requirements Management Software Like Modern Requirements Eliminates Business IT Gaps in Insurance

Modern Requirements4DevOps is a requirements management tool built for highly regulated industries such as insurance and finance, in which software systems must comply with standards including NAIC, OSFI, EIOPA/Solvency II, DORA, SOC 2, and PCI DSS. It does this by turning Azure DevOps into a living, connected repository where every requirement, test, risk, and review is linked in one place.

As Modern Requirements4DevOps directly works within your Azure DevOps workspace, teams can have a single source of truth for requirements and compliance evidence. Insurance teams do not need to chase separate documents or approvals in emails. Instead, they find everything in one place.

Furthermore, Modern Requirements4DevOps allows teams to create traceability matrices with a single click. With this, teams can clearly visualize how compliance requirements like DORA control are actually linked with user stories, test cases, risk records, or deployment tasks and quickly find missing links or requirements. During audits or DOI reviews, insurers can generate compliant evidence and trace matrices instantly instead of reconstructing them manually.

Furthermore, the AI features of MR4DevOps add another layer of value for insurers. With Copilot4DevOps, teams can instantly prepare requirements drafts from meeting notes, convert raw requirements into user stories, generate requirements diagrams or documents, draft pseudocode or testcases, etc. It also helps in assessing the impact of change using an AI.

Finally, the built-in review management module helps teams across multiple departments to collaboratively review requirements and approve them. That means business, IT, actuarial, and compliance teams all work from the same approved record.

Moreover, MR’s version control feature helps track every change to requirements.

Modern Requirements4DevOps turns requirements from a point-in-time checklist into a structured, audited, and automated process aligned with insurance delivery realities.