One way to characterize insurance CEOs' recently acquired appreciation for IT is to say they have finally caught up with the fact that technology is central to the information-driven business of insurance. Another way might be to say that they have finally caught up with Ned Hamil, CEO of Jacksonville, Fla.-based Life of the South (LOTS; $180 million in annual income).
More than a decade ago, when LOTS was a monostate, monoline life insurance company, Hamil faced a destiny-shaping challenge when the insurer acquired several large blocks of business. The 1995 acquisitions brought the company a variety of technology platforms, carried it into new geographies and increased the size of its written business by about 500 percent.
Given that LOTS had a one-person IT organization at the time of the acquisitions, Hamil brought in IBM (Armonk, N.Y.) consultants to plot the carrier's technology future. In order to move forward successfully, Hamil says, "it was critical to take our IT light years from its origins."
Toward that goal, LOTS executed systems conversions, shuttered two large technology operations and consolidated its operations into a common operations center. Hamil then hired Bob Fullington, the IBM principal guiding the transformation, as CIO, and brought aboard his colleagues Tom Lepay, now VP of applications development, and Kirk Hale, now VP of technology.
The technology transformation not only gave LOTS a grasp on its internal workings, the process also gave the carrier an understanding of the IT problems of other companies. That understanding, in combination with Hamil's willingness to embrace business opportunities, would shape the company's future. "We went from being an internalized company to being one that pursued a vision of, 'OK, if we know how to do this, how can we monetize it, grow it and use it to expand our organization?'" Hamil remarks.
A crucial enabler of that expansion arose out of some third-party administration (TPA) business that came along with one of the acquisitions. Sensing the value of the competency, Hamil's team built upon it. "We built a TPA infrastructure that allowed us to not only service our own needs but also those of other insurance companies," Hamil recalls.
LOTS subsequently entered into a relationship to serve as a TPA for one of the country's largest insurers. To be able to do that, Hamil explains, "we had to materially improve all aspects of our technology, including being able to feed the general ledger of a public company and complying with security requirements."
Today LOTS serves a multitude of companies through its wholly owned subsidiary, LOTSolutions, the externally facing arm of the corporation's IT organization. In 2002, the company launched its proprietary eCaps (eCommerce Administrative Process System) solution, which supports mass-marketing campaigns, enrollments, fulfillment, customer service, benefit processing, billing and business analytics. "ECaps interfaces with insurance companies and some of the largest banks in America and executes its functions seamlessly in an automated fashion," Hamil says.
Currently, LOTS writes about $300 million in premium as a carrier while administering about $200 million of other companies' business. Of the $300 million of underwritten business, about 60 percent is processed in a fully automated fashion, according to Hamil. "If we could get another 30 percent improvement on that, it would be very meaningful," he comments.
Still, Hamil sees even greater opportunity in the LOTSolutions business. "The fee side of our business lends itself hugely to technology -- the margins are greater and you are dealing with partners who are sensitive to the interface," he explains. "The bottom line is that IT and the technical infrastructure will be the offensive hammer for the future and will take us to our next aspirations in terms of income."
Life of the South Corp.
Career: Hamil began working in the insurance industry in the mid-1960s, joining LOTS in 1984. He received a B.S. from the University of Georgia and a CLU from American College. Before entering the insurance industry Hamil served as an infantry officer in the NATO Strike Force in Europe.
Technology Philosophy: "It's about hiring good people and staying a bit out of their way — collaboration is the key. My job is one of creating the culture in which our IT professionals can be successful."
"It was critical to take our IT light years from its origins."
To hear more from the 2007 Tech-Savvy CEOs, visit www.insurancetech.com/podcast.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio