CIO Turned CEO Is True Believer

Benjamin M. Salzmann, president and CEO of Sheboygan, WI-based Acuity (formerly Heritage Mutual Insurance; the name change is official this month), developed his appreciation for technology early in his career. Upon joining the marketing department at Foremost Insurance in 1980, the newly minted MBA was quickly frustrated in his efforts to launch new initiatives.

"Everything I wanted to do was always blocked because it needed computer support and there was none," he recalls. "So I decided to go back to night school and get a computer degree. I figured, if everything's so backed up, you can be mediocre in systems and still be a huge success!"

No one would accuse Salzmann, who joined Heritage as CIO in 1990 and was named president/CEO in '97, of settling for mediocrity. In fact, the nearly $600 million-asset regional P&C company is posting impressive results—which the CEO directly credits to technology. This year Ward Financial Group (Cincinnati) ranked Acuity one of the top 50 insurance companies in its Ward's 50 benchmarking study.

"To go even further to the bottom line," Salzmann continues, "in the past five years we have driven our expense ratio down a full six percentage points, and there has been a 20 percent reduction of our expenses. In terms of underwriting performance, last year the P&C industry turned in a combined ratio of over 110. Ours was 101. For 2001, AM Best predicts an industry ratio of 111. We're still going to come in under 101."

In 2000 the company achieved better than 20 percent growth in premiums (compared to an industry growth rate of five percent), while its workforce size grew less than two percent. The reason for such outstanding results? "Good underwriting and, extensively, automation," Salzmann says. "It is driven by our paperless environment."

Salzmann considers the creation of this environment one of his proudest achievements. When a customer calls the Acuity claims center with a simple claim, a check literally is printed for issuance before the call is completed. If the claim is more complex, before the customer hangs up, the inquiry has been routed to a claims adjuster's pager. "They plug a notebook PC into their cell phone, get any coverage or claims information they need, and go directly to the scene," Salzmann reports. It's just as easy if the customer contacts Acuity online.

Acuity is bringing the same efficiency to commercial lines. "Two-thirds of our products already are running through our paperless commercial lines system," Salzmann says. "Ourtotal backlog is 1.5 days."

According to Neal Ruffalo, Acuity's vice president/IT, "Ben seems to have an uncanny sense of understanding which technology to move forward with and which to move away from. His ability to foresee the technology that's really going to grab hold in the industry has been impeccable."

Ruffalo acknowledges it's not always easy having a former CIO as boss. "Ben knows what IT is capable of, so he is constantly pushing," he says. "But the flip side is, there are lots of organizations where the CIO has to fight to get senior management to embrace and leverage technology. At Acuity, it's the opposite. We almost can't deliver solutions fast enough for Ben."

While he is often the driving force, Salzmann does not sign off on technology buying decisions. However, he sits on Acuity's steering committee, made up of the insurer's 11 senior officers, which "reviews IT proposals, sets priorities and if necessary approves additional IT resources."

This way, there is enterprisewide support for and understanding of IT investments. "We're constantly working three years out and with a sense of urgency," he explains. "Any employee can tell you our business model. We always have a clear focus where we're going."

In short: "I want Acuity to be a major market force, a coveted place to work, with technology making everyone's job here intellectually rewarding and management making everyone's job pleasant."

---------------------------------

BENJAMIN M. SALZMANN

President and CEO, Acuity, Sheboygan, WI; approximately $600 million in assets.

EDUCATION/BACKGROUND: Received MBA in 1980; joined Foremost Insurance as a marketing exec. Joined Heritage in 1990 as CIO; named president/CEO in 1997.

PROFESSIONAL INFLUENCES: "Two people I really admire are ACORD CEO Greg Maciag, for what he is doing for the industry at large; and my partner at Acuity, EVP/COO David Pauly."

HOBBIES/LEISURE: Salzmann enjoys in-line skating, and using weight and aerobics equipment at Acuity's health facilities.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio