Jim Fitzgerald, SVP & CIO at Western & Southern, joined Equisoft’s Life Accelerated podcast to share how their approach to digital transformation has outperformed competitors.
The global pandemic accelerated digital transformation in organizations across the globe.
Western & Southern has adopted digital transformation methodically to meet customer expectations. Jim Fitzgerald, VP & CIO, says that’s actually the best decision they’ve made.
Fitzgerald joins the Life Accelerated podcast to reveal the ways in which the company acquired new players, experimented with and adopted new technologies, and shifted talent needs – all to meet customer demand.
The pandemic has accelerated digital transformation as insurers aim to create seamless customer experiences. However, there’s value in testing the waters before jumping in.
Digital transformation doesn’t always mean adopting new technologies quickly, but being methodical to make the right decision for your organization.
Talent in the life insurance industry is changing. More than tech intensive programmers, business analysts with no-code and low-code platform knowledge are needed.
Senior Vice President & Chief Information Officer, Western & Southern
James J. Fitzgerald is the senior vice president and chief information officer of Western & Southern Financial Group based in Cincinnati. In this role, Fitzgerald provides direction for the information technology needs of the enterprise.
Prior to joining the company in 2021, Fitzgerald was with New York Life for nine years as the head of Retail Life Technology. He has also held leadership positions with Bank of New York Mellon and Prudential.
Anthony O'Donnell: I'm Anthony O'Donnell, and this is Life Accelerated, a podcast for life insurers striving to achieve digital transformation. In this week's episode, we're diving into new and old technologies with Jim Fitzgerald, CIO of Western and Southern Financial Group. It's large family of subsidiaries includes Gerber Life and Fort Washington investment advisors, which Jim brings up in the conversation.
During this episode, Jim talks about Western and Southern's distribution models, both direct to consumer and traditional agent based distribution and what that means for technology. He shares the company's main digitization efforts and how it is approaching digitizing the customer experience in response to changing expectations.
Jim Fitzgerald: We don't need to be as perfect as Amazon or as perfect as a retail bank, right? But we have to be good enough so that it's seamless for them and there's not a degradation of what they.
Anthony O'Donnell: Jim shares his interesting take on how their team is approaching the modernization of legacy technologies such as mainframe.
Jim Fitzgerald: When I say that, I don't mean necessarily running off the mainframe or migrating off the mainframe, but just modernizing the footprint that we had.
Anthony O'Donnell: Here's my conversation with Jim, and I think what would be good to start with is just to talk about you about what your background is and how you came to Western and Southern.
Jim Fitzgerald: I've been in technology for a little over 25 years. I started my career on a trading desk actually in equities trading desk in New York City. And then from there I got tapped on the shoulder to quickly go work in technology. I was told I had a knack for how the systems work. And back in the mid nineties, that meant that probably a little bit better than someone at usability and you could get work done.
That's what I think. But anyway, I was tapped on the shoulder to go into technology. I went into technology in a BA, QA project management role at that point, if remember the mid nineties, that's what it was. A little bit of the wild West. But my career started in equities and options online trading. I was part of the team that launched the first online IPO, initial public offering. That was my claim to fame back then, but then I moved into the annuity space probably around 2003, 2004. And then from there, it's been life insurance and annuities ever since. Worked at Prudential for a bit, just recently. Spent 10 years at New York Life Insurance Company and then here I am at Western and Southern.
What attracted me to Western and Southern, it's really the upside. It's the quality of the business that we have here, but it's also the upside of the. If you don't know Western and Southern well, they've been growing through acquisition and organic growth, and the upside here is tremendous. It's a great company.Well capitalized.
Anthony O'Donnell: Let’s talk a little bit about Western Southern structure. What are it's component companies? What markets does it serve and how's it doing as a competitive life insurance company?
Jim Fitzgerald: Western Southern is a mutual holding company, one of the highest rated in the country. Very high quality business.
You'll use that word, quality a lot. It's part of our DNA. Quality's very important in this industry. A lot of people forget that sometimes, but we have a number of companies that we've gotten through acquisition or our own organic growth. Some of our acquisitions, the most recent ones being Gilbert Life Insurance Company.
That acquisition took place a little over three years ago. We did just purchase Fabric technologies, which is really an insurance platform in a box all the way front to back that's built in AWS Cloud. But those two businesses combined, were putting fabric under the Gerber Life brand. If you look in the industry, you'll see fabric by Gerber Life.
That's a big component of our direct to consumer work, but we also have our traditional producer and agent channels. We have our own agency business internally. That's a great business. You've heard of brands like Lafayette Life, Columbus, life Integrity, and Lafayette and Columbus. We're dealing with third party producers that, again, are looking for high quality products with a very rated insurance company, and that's where we fit in well.
Anthony O'Donnell: What does Western Southern Status as a holding company with the structure you just described mean for its technology strategy?
Jim Fitzgerald: Not really a lot, right? I mean, the holding company itself is a legal entity as it relates to our technology strategy. I have responsibility for all of technology in the organization.
Another reason I joined here is I can work directly for John Barrett, our chairman, and CEO. So I work for John. There is a difference here in our direct to consumer and fabric. Those two businesses I mentioned, they are dotted line to. I'll provide, and my team will provide things like security and infrastructure and those normal things, but as it relates to their strategies, while I apply on them as part of the leadership team, I'm not in the day-to-day in managing those direct to consumer, you know, the day-to-day work, everything else in the enterprise, all the other applications, whether they be for integrity for Washington, which is our private client group, or Columbus Life and Lafayette Life, all those systems, applications, they all roll up to make.
Anthony O'Donnell: It's the binary model between the traditional agent channel and the direct to consumer channel.
Jim Fitzgerald: Correct. Yeah, it's a great model if, think about it, because we really do have all distribution channels covered.
You know, we see the value in the direct to consumer and where it's going, so we play in that space. We're playing in that space well with Gerber, but we're also still making sure that the producer, because the producer will always exist, right. And convince the producer will always be there. And the agent, it's just managing those too.
Anthony O'Donnell: How did Gerber Fabric work together? You acquired Gerber about three years ago and then the fabric acquisition happened, I guess in the past year so are both of them part of your D to C operation?
Jim Fitzgerald: They're partnered at the hip. Gerber has been in the direct to consumer space for years. You see a lot of TV ads, a lot of print ads, a tremendous amount of online social ads, placements of online marketing fabric fits right into that.
What Fabric brings to the table is really a complete solution front to back. Like I mentioned earlier, that's really an insurance company to box. So all the way from app submittal through underwriting, processing that policy and issuing it all the way through till if there's a death claim, it's all done by one solution built in the AWS cloud.
I think it'd be a game changer for us, at least from the direct to consumer space.
Anthony O'Donnell: Is the idea for Gerber Fabric to assimilate into each other, or for fabric to assimilate into Gerber or the other way around? Is it some kind of model that's going to coexist with Western and Southern in the future?
Jim Fitzgerald: When you're taking two entities that have a very large or noticeable footprint on the web in terms of online marketing, you wanna be very careful about, you can't just push those two things together too quickly so they're locked at the hip.
Now, we just went and did a new term product in market through the fabric platform. It's fabric by Gerba life, and then over time we'll see how the two entities become one. But the moves that we made with fabric and the intelligence that we have from a long-standing direct to consumer business with Cobo Life, I think it's gonna be a great partnership.
Anthony O'Donnell: All right, so let's go back to your perspective as enterprise CIO and talk about a brief 10,000 foot view of the major initiatives that you're undertaking.
Jim Fitzgerald: Everything from a consumer perspective, right? I'm sure you've heard this. Covid spent a lot of things up for us, especially in the insurance space.
So anything from a portal perspective, what we're getting in front of our customers, what we're getting in front of our producers, notifications, really the whole digital plate to make their lives a lot easier and how they interact with us doing a big implementation, a big new business and underwriting implementation, using a lot more models for underwriting, getting electronic health records.
Those are two big pieces, but also the things like a core modernization, right? Tackling. Those legacy systems, whether they be policy admin or commissions, a lot of them are mainframe based, so that's a big part of it as well. And then everything else that I mentioned on our direct to consumer strategy with Gerber and Fabric.
Anthony O'Donnell: On the underwriting, is that kind of moving towards an accelerated underwriting model.
Jim Fitzgerald: That's exactly what it is.
Trying to speed up our time to issue, make it seamless for the producer and the policy holder. Buying insurance sometimes can be difficult for a lot of hoops to jump through, life insurance specifically. So we're trying to streamline that as much as possible and really get that time to issue down, but at the same time, obviously making the right decisions as it relates to the risks that we take on.
Anthony O'Donnell: Let's talk about your digital transformation agenda. You've spoken obviously about Gerber Life and Fabric being your D to C channel, so maybe we can begin with digital initiatives for the agents.
Jim Fitzgerald: So for the agents, really, you know, we have a Salesforce implementation for our agents already. We're doing some Salesforce implementation for some of our third party distributors and also in our investment management business within Touchstone.
But really it's around notifications cuz we have a lot of the very complex environment and you can't perfectly integrate all of that. It's just hard to do. But really, getting anything that they can do online or do it themselves through whatever mechanism. That's really the goal. We won't be able to do everything.
But going back to Covid, there's always been a saying that we've lagged about five or six years behind the banking space. You know, some people can think, sure. Some people might say it's four. I think Covid sped that up, meaning that everybody's gone digital in this huge push for digital in all industries, and we can't be a carrier the insurance industry in general can't have everyone else going to these different service. Doing online address changes, doing online withdrawals, doing online everything, and then they come to the insurance industry or us and have to do things via paper. There's too much friction in that. So we don't need to be as perfect as Amazon or as perfect as a retail bank because there's a much higher transaction rate between that, but we have to be good enough so that it's seamless for them and there's not a degradation of what they expect.
Anthony O'Donnell: Are these transformation efforts more of a push from the carriers and from Western Southern in particular, or more of a pull from the agents?
Jim Fitzgerald: I think it's both agents are demanding. Sometimes a little too much, but they help us get better, right? They're the ones that are in the field, they're seeing it on the ground every day.
But we have a great marketing department here. We do a lot of marketing research, really understanding what consumers want. So I think it's a dual approach, and it depends on where we are in our journey. Sometimes it's the agents pushing for a lot. Sometimes it's us as a carrier saying, Hey, we need to get this in the hands of the consumer, so we don't necessarily have to do it from a back office perspective.
Anthony O'Donnell: And so that's the agent's side. How do you think about digital when it comes to the policy holder and what initiatives are you undertaking that reflect that?
Jim Fitzgerald: So from the policy holder, again, getting them access to information as seamlessly as possible. If they wanna go on onto a website and look up what's happening with their policy, whether their life insurance policy or their annuity contract, that needs to be instantaneous and it needs to be there.
Registration should be easy. Their ability to access the portal should be very easy. Their ability with transaction on the portal, even though it is a low touch product, it still needs to be up to par with the financial services industry, and that's really a big part of it. There's a lot of things you can do from a consumer perspective, as simple as just a text sometimes to say, Hey, thank you.
We processed. Premium payment. Just that interaction where we show up on the device, we show up in front of the person because not trying to be repetitive, but people look at their checking accounts every day. People may only look at their insurance policy once every couple of months if that. So again, making that a great experience for when they do come in.
Anthony O'Donnell: So Jim, in your introductory comments, you brought up legacy system replacement. You mentioned the continued existence of the mainframe. What's the significance of legacy systems or the legacy system issue to how you can deliver a digital experience to customers and distributors?
Jim Fitzgerald: First off, I'll say this. Mainframes aren't necessarily bad. I think mainframes fit for purpose, do a great job, and we can surround your legacy systems and have a great service as architecture and try to shield the consumer or the policy holder from some of the slowdowns that may happen in some of the older mainframe architected systems.
We're doing all that. We're doing our mainframe or other legacy systems, so from a producer and a customer perspective, it's seamless to them. There might be some other orchestration that we're doing. But what really worries me about the mainframe is the talent and the access to talent as an industry. We've been talking about this for a long time.
I've been in the industry now since 2004, 2005, and the industry has done some of it, but not everything that I think it's need to do. Are we going to have the talent to support these systems long term? Will there be erase at the bottom as it relates to Coldwell mainframe development? You could argue in some spaces you're already seeing that.
But I'll tell you this, if I have two 20 year old sons, I would love one of them to get into mainframe development of some sort cuz they'd be gainfully employed for a while. Not forever, but definitely. So a while.
Anthony O'Donnell: That’s interesting. Before we go any further into the talent question, tell us what you're doing with mainframe. I think in a previous conversation we talked about your adoption of AIP and more generally, you've already mentioned the wraparound strategy. Tell us what you're doing there, and then we'll go from there into a discussion about what kind of skills you're going to need in your organization.
Jim Fitzgerald: The wraparound strategy we spoke about as it relates to mainframe itself, really looking at how do we modernize some of the mainframes.
There's the term mainframe, and then there's different shades of maturity in your mainframe environment. So we're working with some partners or looking at some potential partners that could help us in this space. How do we modernize the mainframe that we have and modernize? When I say that, I don't mean necessarily running off the mainframe or migrating off the mainframe, but just modernizing the footprint that we have and some good things done in that space. So that's what we're investigating and really it's a consolidation play through the acquisitions that we've had. We've had a couple of mainframe instances that have come along with those. So how do we consolidate that, try to get our MIPS usage down and get some of the economics to work.
But in mainframe modernizations, you're not gonna have a CBA play. Some of those is just gonna be a cost of doing business, cuz long tail that we have on the policy.
Anthony O'Donnell: Okay. So as you move to different technologies, I mean, your attitude to the mainframe seems to be to run it more economically, but if it ain't broke, don't fix it.
But would you agree that the skill mix is changing in the organization?
Jim Fitzgerald: Skill mix is definitely changing. I've seen technology change too over the last 20 some years where it was very tech intensive in the early days, you know, and a lot more focus on engineering. And then other disciplines came up around that, which all those disciplines add value, which really boils down to the people who can move work in an organization, get the work done, who are smart technically, but good partners, there's a huge rise in terms of low-code no code platforms, configuration. That puts a lot of things in the hands of the business too.
Anthony O'Donnell: Right, right. So fewer programmers, more business analysts.
Jim Fitzgerald: Exactly. The talent that I'm looking for now is gimme somebody who's curious, who knows my business or can come up to speed on that quickly.
We can teach them a language within reason, a software language we can teach them, but that's really the profile of the person I would be looking for.
Anthony O'Donnell: So Jim, I thought maybe we could finish with a discussion of the role of cloud in the transition away from legacy technology and just for the future of insurance systems.
What are your views on the cloud generally? Do insurers understand the benefits and the limitations of cloud and what's gonna be needed to transition to the cloud as much as we should and could?
Jim Fitzgerald: It's been around the cloud work now for a while, since it came into the industry and when it first came in, a lot of people didn't understand it.
A lot of people who may not still understand the benefits of it, but I think that you have to be very prudent. In what you put in the cloud and why? In the beginning it was you could put everything in the cloud and yes, everything could run in the clouds to an extent, but there's concept like cloud native or you're just hosting something with someone else and they're running it for you.
There's different ways to look at this. I think that understanding what you have in house and understanding what can go on what timeframe is very, very important. I've been around a lot of conversations around the cloud where everybody talks about the art of the possible, but you have to look at what you're dealing with now.
What do I have in house. If I run that in the cloud, what's my benefit? That's basic CBA is on, okay, am I gonna get throughput? Am I gonna get increased throughput, I'm gonna reduce my risk, am I going to have a better operating expense as it relates to the storage compute expense, what have you. The flip side of that though, so I'm a big corner of the cloud.
but there's been some recent articles, you know, with the economy, the way it's going. I don't know if, there was a journal article probably about two months ago that spoke about CIOs having some cloud regret and cuz the cloud providers are upping their costs and now you're in their cloud and they're upping their costs, you don't necessarily have a lot of leverage at that point, especially if you've given everything over.
So the approach we've taken here, just like we've done with everything else in our 134 year history is very methodical. We're not gonna be the first in the pool. We watch the industry, we realize what's the right things to do from a technology perspective. We've got every cloud provider, all the big ones right now.
So from a Google perspective, Herbal Life does a lot of their marketing analytics and Google Cloud. Great partner for us, AWS I mentioned, we started the relationship with them, with our fabric acquisition, that insurance company being built all in AWS. And then on the Azure side, we have a data lake that our actuaries are using, doing a lot of things on mortality, behavioral analytics, things of that as it relates to underwriting and pricing of products.
That's where we are right now. From a cloud perspective, we have a lot more to do, but I wouldn't sit here and say, me as a CIO of Western and Southern that in four years we're gonna be out of our data centers and everything's gonna be in the cloud. I think that would be a careless statement. Do I think we'll have a larger footprint in the cloud? Absolutely. No doubt about it. And a lot of partners right now, a lot of software providers, they're coming to the table with now platform to the service where it's like, okay, we'll provide the platform, build the software for you. You wanted them in their instance. So I think the cloud has a long way to go.
I'm very grateful that Washington and Southern didn't jump in headfirst because it allows us to be a little bit more methodical and make the right decisions.
Anthony O'Donnell: Let me throw one more question. We've talked a lot about legacy technology. We've talked about the value of some legacy technology, and we've expressed some skepticism about some of the hottest emerging technology cloud in particular, what would you regard as your three indispensable digital initiatives?
Jim Fitzgerald: First off, it's gonna be the direct to consumer work, that digital work that's happening between Gerber and fabric, without a doubt. Second up there. I would say from a digital perspective, it's everything to do with how we're facing off with the customer. From the underwriting perspective all the way through till when they're a customer of ours and they're accessing our portal, we've done a number of things.
So how we show up to the policy holder and the consumer, a lot of things that have happened already and that are happening there. And then that same thing is really to our producers and our agents, getting them information as quickly as possible and making it seamless all digitally, right? People don't want to pick up phones anymore.
They wanna text, they wanna maybe chat, they're using chat bots, things of that. And my belief is that those things are all important, but a lot of that could be driven down if we just simply notify people more often with pertinent things. Think about it, customer calls cuz they have a problem. We can see some of those things and get in front of them, right?
A producer's calling, why does a producer call? Where is my customer in underwriting? Why aren't we not just notifying them via text or an email? Hey, here's where you are on the journey. We'll come back to you with more information. It's really a push to get information out to all the right constituents as quickly as possible and as accurately as possible.
Anthony O'Donnell: I mentioned during my conversation to Jim that I could summarize his thoughts on mainframe modernization as if it ain't broke, don't fix it. It was interesting to hear Jim's thoughts on this tried and true technologies continuing role in a changing environment. It's strange, as Jim suggested, that the more likely argument against mainframe technology is increasingly the difficulty in finding professionals with the requisite skills.
Jim also stressed the difficulty of attracting and retaining talent. Not for just say cobal, but for modern technology as well. Thank you for joining us for the Life Accelerated Podcast. For more relevant content to help you achieve digital transformation, visit equisoft.com/life accelerated.
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