Once a year Insurance & Technology turns its editorial focus away from the doings of representative peers of our senior technology executive readership to the business leadership that gives them context and scope for their efforts. We profile five insurance CEOs deemed to be “Tech-Savvy,” as demonstrated by their understanding of and commitment to information technology as a means of competitive distinction and a prerequisite of operational excellence.

I&T’s annual July issue dedicated to the Tech-Savvy CEOs of 2007 will soon be on the street, but in the meantime we offer our readers of Insurance & Technology News a sneak peek at the five CEOs profiled in print. Today’s edition includes not only exclusive stories beyond our print content, but also audio podcasts featuring I&T’s editors talking with this year’s Tech-Savvy CEOs about the role of technology in their businesses and their careers.

By Anthony O'Donnell

In the vein of author Steven Covey’s work, there are no doubt common characteristics of highly successful insurance CEOs—and even Tech-Savvy CEOs, as we suggest elsewhere. However, there is no template for technology-astute insurance leadership. This year’s crop of I&T Tech-Savvy CEOs come from widely varying backgrounds, geographies and even generations and have learned valuable lessons from widely diverging experiences. Perhaps something can be gained by a more personal look at this year’s CEOs, if only amusement or some basic view into the compatibility of various personalities and success. Something, after all, is said by what a person dedicates himself to, endorses or honors, and as the great literary figure Samuel Johnson once observed, “no man is a hypocrite in his pleasures.”

Unum Group CEO Tom Watjen takes pleasure in films, such as “Invincible,” the Mark Wahlberg “male weepie” about a bartender who eventually made it to the Philadelphia Eagles as a special teams player, which was the last movie Watjens watched on his iPod. “I’m always a sucker for those inspirational movies,” he admits.

The entertainment device was an outgrowth of Watjen’s affinity for mobile productivity devices, which help him stay connected to work concerns during his frequent travel. “I got the higher-capacity iPod over the holidays, and have downloaded four or five movies, and actually a book or two, as well,” he reports.

Joe Beneducci, CEO of Fireman’s Fund shares Watjen’s affinity, although to such an extent that he characterizes himself as a gadget junkie. “Whatever the new technology, I have a tendency to be interested—which drives my wife nuts,” he confides. “We have more useless electronic gadgets, whether music or video related, we have plenty of that junk lying around.”

However, the main focus of Beneducci’s downtime is his wife and their four children. “My free time is their free time,” he says. “I try to stay disciplined about their activities and make sure I’m a good husband and a good dad.”

During business travel Beneducci indulges a passion for reading both business and general material and has managed to work in biographical works on Alexander the Great and the Founding Fathers.

If Life of the South CEO Ned Hamil had some more time, he would like to do some writing. He is interested in both more broadly creative themes as well as management topics and, in fact, is pondering completing the unfinished manuscript of work on management authored by a deceased friend.

Like many executives, Hamil likes to golf, but he takes special pleasure in traveling with his children and grandchildren. “I continue to tell people that probably the greatest reward in life is your relationship with your adult children,” he shares. “You have to believe you at least did something right along the way.”

These mellow pleasures contrast with the tense uncertainty of the time Hamil spent as an infantry officer as part of a NATO strike force in Europe during the Cold War. Alert to the scenario of a Soviet invasion, Hamil and his comrades were oriented eastward, “looking into the Fulda Gap to see all the tanks flowing down,” he recalls.

Rod Fox, CEO,
Praetorian Financial Group, didn’t serve in the armed forces but seems to wish he had. A sports injury complicated his efforts to join the U.S. Navy SEALs, separating him for a time from friends who did join.

If he hadn’t been an insurance executive—or a Navy SEAL—Fox says he might have liked to be a football coach. He currently coaches both football and lacrosse, partly as an expression of his devotion to his four children (two boys, two girls). He also continues to play lacrosse at a club level.

Upon taking the reins as Praetorian’s CEO, Fox combined his interest in leadership, physical fitness and the SEALs in a corporate retreat for his colleagues run by SEALs in a rural area outside of Dallas. “You wake up in the morning and you work out,” Fox explains. “Then we have a business meeting and then you work out again; there’s something genuinely strenuous two or three times a day over three days.”

Despite this grueling regime, combined with temperatures in excess of 90 degrees, Praetorian CIO Mike Anselmo swears the retreat was “a ball.” His boss is proud to emphasize a level of activity that is not meant to be confused with namby-pamby, feel-good corporate retreat activities that have the appearance of outdoorsiness but not the true grit, but says that the effort is rewarding. “It really brings the group together, away from the day-to-day corporate nonsense,” Fox asserts. “I believe it’s my job to make people better and realize the potential.” In dedicating to helping his colleagues bring out the best in themselves, Fox says he applies the SEALs’ philosophy that “everybody is ten times better than they think they are."

Editor's Note: Kathy Burger contributed to this article.

by Nathan Conz

There's an old military strategy known as “pivot and hammer.” The pivot is a defensive position that takes less energy to defend. The hammer, on the other hand, is an attacking position. There's more opportunity for gain here, but more energy needs to be expended to support it.

When it comes to technology, insurance companies traditionally have focused on the pivot. Thinking about IT has been of a more defensive sort, dedicated to minimizing cost and minimizing the impact of the IT budget on a company's bottom line. Today the more competitive insurance carriers have begun a more aggressive use of technology in support of competitive differentiation. A few have gone so far as to make IT a profitable enterprise unto itself, turning IT cost centers into IT profit centers by leveraging internal technological resources as external technology vendors.

Included in that list are two of I&T's 2007 Tech Savvy CEOs: Life of the South's Ned Hamil and Medical Mutual of Ohio's Kent Clapp.

Hamil, himself a former Cold War era infantry officer, uses the pivot and hammer terms to describe LOTS' two primary sources of revenue. Right now, LOTS derives its income 50-50 between the risk (such as payment protection) and fee (such as database marketing solutions) sides of its business.

The company will continue to grow those more traditional lines of business, Hamil says, which are very reliable in terms of revenue. Still those revenue streams are not “target rich.” Growth in the area is finite, he says.

The hammer is a different story. For LOTS, the term refers to fee-based business, mostly via LOTSolutions, a wholly owned Life of the South subsidiary that acts as a sort of technology vendor and services provider. Hamil says Life of the South's goal is to derive a great majority of its income from LOTSolutions. “The margins are greater, and you can leverage technology there. The IT leadership of our systems will be the hammer, or our offensive instrument, that we will use to drive our company's revenue for the future,” he says.

At Medical Mutual of Ohio, CEO Kent Clapp doesn't use the same military terminology to describe Antares Management Solutions, a company he helped found in 1997. Nevertheless, the idea behind Antares remains similar. “We had a substantial technology capacity and it opened up new revenue streams in that we do business for other companies,” Clapp says.

A decade after its founding, Antares now has 650 employees and generates approximately $282.5 million in revenue. Most of that revenue comes from business and technical outsourcing, third-party administration and network access services.

Clapp says spinning-off Medical Mutual of Ohio's data processing shop has improved IT service, internally as well as externally. “They've learned to treat us, and their other customers, like customers. Their whole overall service levels have improved dramatically. Not that they were bad before, but I think it became state of the art,” Clapp says.

According to its Web site, LOTSolutions manages more than $100 million annually in monthly billed fees. At any one time, Hamil says, the company may handle processing for as many as 15 to 18 insurance companies while also handling third-party business for many large U.S. financial institutions on behalf of “a very large insurer” in a database marketing environment.

“If we had stayed internalized, just serving the internal needs of our own company, I don't think we would have ever developed the breadth of understanding that we now have of the needs of multiple companies,” Hamil says. “If we had remained attentive only to our own companies, we certainly would not have developed a reputation in the industry as a premier third-party administration.”

By Anthony O'Donnell

Just as lack of understanding between business and IT is one of the great predictors of failure in technology investment, one of the distinguishing features of companies that effectively invest in technology is tight alignment between the two camps. That insight is broadly appreciated in the industry today but like so many things, achieving business/IT alignment is easier said than done. It is far more likely to be achieved, however, when driven from the top, as exemplified by both the technology philosophy and the actual performance of Insurance & Technology’s Tech-Savvy CEOs of 2007.

“Where I’ve seen failures is where when senior business executives want technology to support their business but don’t adequately inform the CIO about where they are going as a company and what they are trying to do strategically,” relates Rod Fox, CEO of Praetorian Financial Group.

Fox’s approach is to insist on transparency about the strategy of the business and “immersion” of Praetorian CIO Michael Anselmo in the affairs of the business. “It’s not a matter of, ‘Mike, come up for an hour on Tuesdays and we’ll talk,’” Fox explains. “Rather it’s, ‘Mike, you are a part of the group running this business so you need to see everything: You need to see all the numbers, you need to meet the producers, you need to be in the field and see what they’re doing, and you need to know how they are interfacing with their end-customers.”

Fireman’s Fund CEO Joe Beneducci stresses personal interaction with technology executives at various levels in order to maximize what might be achieved through business/IT collaboration. “My tendency is to push the limits within our team toward what we can accomplish with different technology,” he says. “At the same time I try to make sure they are in a comfortable environment where they can say, 'Joe, it's a great idea but, honestly, it's not going to fly, and here are the reasons...”

For Beneducci, business/IT alignment is not merely about business leaders understanding technology better, it’s about mutual respect between business and IT executives. “The industry is littered with examples where one side, whether the business leaders or the technologists, haven’t respected the other,” he observes. “For every one of those, you can find a disaster of a project that has been left behind.”

While different executives have their respective spheres of responsibility at Fireman’s Fund as in any other company, Beneducci drives a strong sense of common purpose between business and technology. “At Fireman’s Fund we do not consider either technology or business a separate team; there is one team and both groups are vital to ensuring that we can deliver the appropriate solution.”

Life of the South CEO Ned Hamil similarly calls attention to the integration of IT within his company’s strategic leadership. “Our IT is not compartmentalized, nor is it an entity unto itself,” he remarks. Because the company started small and IT was essential to its growth both as a carrier and a third-party administrator, Hamil says, “all of our programming staff, our operators and subsequently our business unit leaders closely integrated into the whole business process.”

Adds Hamil: “I can’t overemphasize how important it is to drive quality IT interaction with business unit leaders, as opposed to someone selling a marketing idea and flopping it down in front of the IT folks and saying, ‘I told them we could do this; we need it by Monday.’”

That interaction is at a premium in a company that sells its services to other carriers, Hamil suggests. Because his business and IT professionals work closely together, he explains, it allows the organization to “put a very cohesive face on our company when we go back to the client, so he doesn’t see a dysfunctional or fractured response. He gets very cohesive response and a very professional introduction to our company.”

Kent Clapp of Medical Mutual of Ohio emphasizes the importance of communication skills on the part of technology professionals to bring the benefits of technology to business users. “We spend a lot of time making sure our [IT department] and users of systems have great communication and work very well together,” he notes. At the same time he stresses the need for all executives to be alert to the potential of technology to improve the business. “It’s all management’s responsibility to look for ways to improve the company,” he says. “It’s everybody’s job—including mine — to make sure that we have top-notch business processes that give us a strategic advantage in the marketplace.”

Business/IT partnership is not something that Thomas R. Watjen, president and CEO of Unum Group, only gives lip service to; the concept is part of the Chattanooga, Tenn.-based benefits providers’ corporate DNA. “We are very, very firm believers that using technology smartly does create substantial competitive advantage for us,” he says. “The way we’ve set up our process here works very well for us, where it starts with the business people in concert with the technology teams – thinking through what we’re trying to do from a business point of view, and using the technology to support that business process.”

While Watjen is a firm believer in these principles, he gives the credit for institutionalizing the alignment to CIO Bob Best, acknowledging, “That’s something that has been drummed into my head by Bob Best and his team.” The bottom line, Watjen says, is that “Any technology discussion starts with a business purpose. Bob has actively engaged his business partners around the company in a dialogue, which starts with what we are trying to achieve business-wise. Then we use technology as a piece of that enabler. So, under his leadership, it’s always been done the way we’ve done business here.”