Insurance company CEOs are responsible for providing organizational focus. For Heritage Mutual's Ben Salzmann, technology is an important part of his vision.Ben Salzmann believes that technology must permeate every corner of an insurance company if the organization is going to succeed.

"Technology has to be everywhere," says the president and CEO of Heritage Mutual Insurance Co. "It transcends every aspect of the company. Everyone needs to be technology literate, and you must have (technology) believers in every department. It's literally that important."

Not surprising, perhaps, for a CEO who went back to school and obtained a computer information systems degree from Aquinas College in Grand Rapids, Mich., and subsequently taught computer and project management courses.

Although many insurance company executives preach the technology gospel, Salzmann has statistical proof demonstrating the positive impact that technology has had at the Sheboygan, Wis.-based property/casualty insurer.

For example, figures in the annual Ward Property and Casualty Benchmarking Study, published by Cincinnati-based consulting firm Ward Financial Group, show Heritage Mutual well ahead of its competitors in various benchmarking categories that in large part can be traced to the insurer's IT advantage.

The study notes that the average number of employees per $100 million in premium for property/casualty insurers is 214. Heritage Mutual, however, has 184 employees per $100 million in premium-30 employees below the industry average.

In addition, while the average combined ratio in the property/casualty insurance industry is 107.5, Heritage's combined ratio weighs in at 101.5.

Reducing costs

Technology isn't the only basis for Heritage Mutual's rather healthy numbers, but there's little doubt that it plays a large role.

"They've leveraged the systems and the talent they've brought in to lower their costs," says Mike Keller, Ward's director of benchmarking services. "It's very unique for a Midwest mutual. Heritage bucks the trend and really makes technology the centerpiece of the organization."

Another reason why Heritage Mutual is somewhat unique among insurers, he adds, is that the entire organization-from operations staff, such as underwriting and claims personnel as well as agents-benefits from new technology.

"They integrate agents into the process," when new technology is implemented, Keller says. "That makes for a smoother transition."

Heritage Mutual has launched numerous technology initiatives in recent years. Recently, it moved to a Java-based programming language to facilitate interest in online rating of various insurance products.

The carrier also re-engineered its processes, instituted an expert underwriting system, and is well on the way to having a paperless office.

With claims handling, for example, Heritage Mutual closed down 14 remote offices, eliminating much of the paper in the claims process and enabling agents to exchange information electronically from remote locations, Salzmann says.

To improve customer service and become more efficient, Heritage Mutual gave its claims personnel cell phones, laptop computers, pagers and high-speed Internet connections that enabled them to work remotely and respond to claims more quickly.

Creating a vision

"Ben was a definite catalyst on the Internet rating and the ability to do Internet rating from the Applied agency management system," says Laura Conklin, director of business systems at Heritage Mutual.

Applied Systems Inc. is an agency management systems vendor and insurance technology provider based in University Park, Ill., that has helped spearhead Internet rating.

Salzmann's IT background has also contributed significantly to the company's technological and financial success, Ward's Keller adds, noting that of the approximately 40 insurance companies he studies, only one or two CEOs were formerly CIOs.

Having a technology background has been beneficial, but Salzmann brought other leadership qualifications with him when he joined Heritage in June 1990.

Salzmann has a master's in business administration in marketing from the University of Wisconsin and was previously marketing manager of customer retention and manager of computer systems development at Foremost Insurance Co., Grand Rapids, Mich.

But Salzmann acknowledges that knowledge of technology isn't the only leadership trait that an insurance company CEO must have. "You have to listen to your people and encourage people to reach for more," he explains. "You don't need technology to do that.

"The most vital role for a CEO is to be a visionary. It unites the company and charts a correct vision for the future. A company needs to reach the highest technological plateau it can obtain."

That vision is recognized and echoed by Salzmann's staff.

"Coming from an IT background, he realizes the force and importance that technology has in everyday life," Conklin says."There's been a huge transformation with technology since he's been in the driver's seat."

Everyone at the company, for example, has a personal computer with e-mail and Internet access. "Ben realizes that this is the way we are all going to be in the future, in our personal lives and at work as well," Conklin adds. "We see a great push for Internet development at Heritage Mutual and to develop the attitude of empowering our customers, whether agents or direct consumers and also our internal employees."

Heritage Mutual, for example, runs internal technology training for its staff and encourages all of its employees to take technology courses, such as Java programming language, that the insurer pays for.

"It's an attitude," Conklin says. "We want to be in the forefront of the technology revolution and take Heritage employees along for that ride. No one is left behind."

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