In defining an insurance company's culture, Rich Pedersen,senior vice president and CIO of National Life Group, believes itis important to understand what the existing culture is, what arethe norms of the people working for the company, and what are thestructures those employees work within.

Coming to National Life four years ago, one of Pedersen'smandates was to change the culture around IT within the carrier.There were some sidesteps brought on by forces more powerful thanhe, but Pedersen is progressing toward that goal.

"You can't just transform any one area alone, whether it isprocess, culture or systems," he says. "You have to create aunifying message of transformation to get people to understandthere is a larger purpose for which you are about to lead themthrough—including a bunch of painful changes—and then lay out thesteps."

It's a slow process in the beginning, but Pedersen believes itbuilds momentum through constant communication about the rallyingcall.

(Read more about all our 2012 Insurance IT All-Stars:Peter Moreau, Thad DeBerry, RickRoy, and Bryan Fowler.)

It helps that Pedersen has spent time on the business side andhas worked to share that knowledge within IT and with his businesspartners.

"The ability to relate to the business—how money is paid, howdistribution works, and following the dollar—is imperative," hesays. "IT, in a financial services organization, isn't for the sakeof IT. It's to help bring value to the business so you can go tomarket more efficiently and service your client more effectively.It is fundamental to being successful as a CIO."

Pedersen came on as CIO at National Life just as the financialcrisis played havoc with the life insurance industry. Looking backon the end of 2008 and the entire 2009, Pedersen today can reflecton what a valuable learning experience it was for him and theindustry.

"To think I had the opportunity to be at the helm with a peerexecutive group to navigate probably the most tumultuous time sincethe Great Depression was an opportunity of a lifetime," he says."You can only call it an opportunity in hindsight, though. When Iwas brought on it was to deal with the strategic initiatives thatwe were going to build on for the next three to five years. We weregoing headlong down that path, assessing the strategiccompetitiveness and the strategic differentiation of ourorganization, creating a vision mission statement, creating theoverall three-year strategy for the corporation."

When the crisis hit, though, it was "all handson deck" throughout the financial services industries, points outPedersen.

"At that point it was a time to be supportive of the new missionover the short run," he says. "We made as much progress as we couldon the legwork. We knew we were going to come out of the crisis andwe actually turned a profit in all years—including 2008 and2009."

It was not a time to focus on new IT initiatives, but it was atime to focus on the IT division, which hadn't been functioning atthe highest level, according to Pedersen.

"We instilled a lot of rigor knowing the pace of execution wasgoing to go up in the coming years," he says. "Many of the thingswe knew we needed, we started building at the end of 2008 andthrough 2009. We launched into strategic initiatives in 2010. Theselast three years have been the build-out from a much more solidfoundation within IT."

Pedersen believes the industry has now reachedan extraordinary time in the insurance business.

"We're at an inflection point," he says.

Insurers have an aging, imbedded base of insurance producers anda buying public that is younger and savvier about technology.

"The up-and-coming middle class and the emergingaffluent—younger people making money and buying houses—have grownup around a technology-oriented lifestyle," says Pedersen. "Theyare people that have never known anything else but to have acomputer and information at their fingertips. The whole notion thatinsurance is sold and not bought is in flux right now."

Pedersen describes the insurance world today as at a pivot pointwhere these young information gatherers are beginning the salesprocess themselves. They are doing the research on financialservices and what they should be doing at life-cycle points andthey are not interested in having sales people conduct atransaction in their house.

"You need to prepare your IT organization and your operationscenters for that change and how the transaction life cycle will beconducted using technology such as social media, multimedia,information sharing, browsing technology, search engineoptimization, and Skype for the interview process," he says.

Cybersecurity is Pedersen's biggest worry for the future.

"There are a lot of bad guys out there," he says.

Carriers need to remain diligent and try to stay in front ofwhat the bad guys are thinking. He points out that the moreinformation that becomes available, the more bad guys want to gettheir hands on it.

The trend today is for insurers to conduct more business throughelectronic transaction, which calls for far more security.

"When business was done with a handshake and a pen and submittedto the back office, the availability of the financial transactionwasn't as great," says Pedersen. "The opportunity didn't exist asmuch for it to be corrupted. The more business is conducted in apublic medium, the more you have to be diligent about how yousecure it. Ensuring you have the appropriate built-in redundancy,fault tolerance, and disaster recovery is always a challenge."

An inside look . . .

Rich Pedersen started working with Mass Mutual in 1986 and spentover 22 years with the financial services company in a variety oftechnology and management jobs—including four years on the businessside—that eventually led to a position as divisional CIO for theU.S. IT division.

"I was also asked to lead a modernization effort of businesstransformation," he says. "I was trying to bring a focused efforton fundamentally changing the old way [Mass Mutual] went aboutdoing business and rearchitecting it to become a modernizedbusiness process with modern systems supporting it. It wasenormous."

A call from a head hunter led to Pederson heading to NationalLife Group four years ago and a position as senior vice presidentand CIO.

"It's a much smaller company, but with the same aspirations offundamentally transforming the company culture," he says.

Karen Pauli, research director at TowerGroup describes RichPedersen: "Rich Pedersen's breadth of experience ranging from ajumbo insurer to a midsized insurer allows him to blend the best ofboth worlds—global complexity and laser-focused marketrelationships.  One of the most difficult things fortechnology professionals to do is to understand issues from thebusiness perspective and Rich excels in this area.  He ismost specifically in-tune with what distributors need and this ismission critical given the tough customer/distributor market we arein.  Rich has an excellent understanding about thecultural side of IT transformation initiatives and was able tosuccessfully guide National Life Group.  Rich also iskeenly aware of the need to right-source transformation initiativesfor maximum results and he established a strong partnership with anIT service organization to optimize results."