Almost a quarter of the insurance industry is set to retire by 2022, and Butler University’s College of Business in Indianapolis is preparing its graduates to fill those voids by establishing its own student-run insurance company.
As a “captive insurance company,” the student-run business will insure certain programs at Butler, perhaps including the live mascot, Butler Blue III, or physical damage to University vehicles. The goal is to have the company fully operational by the 2019–2020 academic year.
College of Business Dean Steve Standifird said the idea behind the internal insurance company is to give students hands-on experience and prepare them for an industry that expects to need tens of thousands of new employees over the next seven years to replace workers who will be retiring.
According to figures from the U.S. Bureau of Labor, the insurance industry will need to replace 104,000 insurance sales agents, 71,900 claims adjusters, 67,400 claims/policy processing clerks, 28,900 underwriters, 8,500 software developers/programmers, 7,500 computer/information analysts, and 6,900 actuaries by 2022.
“This captive insurance company builds on Butler’s model of experiential learning,” said Zach Finn, Clinical Professor & Director of the Davey Risk Management and Insurance Program in the College of Business, who will supervise the students. “We have students who manage a $2 million financial endowment, and many universities around the country do that. There’s no reason students with the proper setup couldn’t manage an insurance company.”
Finn said the program will give students the opportunity to look at risks that face the university, assess the financial impacts, and determine whether the risks would be best retained and paid for with university assets as they occur, through traditional insurance markets, or through a captive insurance company.
Students will learn how to write the insurance policy, what the coverage terms will be, how to finance the company, and more. They will be able to apply their risk-management expertise in accounting, investments and numerous other areas.
Industry Start-Up Money
The money to start Butler’s captive insurance company comes from a $250,000 gift from Indiapolis-based MJ Insurance and its CEO Michael M. Bill.
“We are excited about this partnership with Butler University and the Davey Program,” said Jon Loftin, president and COO, MJ Insurance. “Butler has consistently graduated students from the College of Business more prepared to enter the workforce due in large part to their emphasis on experiential learning and providing their students with the unique opportunity to apply the academic principles in a real-life setting.”
MJ and Bill’s initial gift will cover the minimum amount of capital that’s needed to fund a captive insurance company at its outset. The College of Business also will be soliciting gifts to fund the operating costs.
“The insurance industry has been very rewarding to me over my lifetime, and I appreciate all that it has given to me, my family, and the opportunity to be the founder of MJ Insurance, Inc. for the past 51 years,” said Michael M. Bill, chairman and founder of MJ Insurance. “If we can instill a path to the students via the kind of training that I had as a very young man, it will be not only rewarding to the students that graduate through the Butler University College of Business in Insurance and Risk Management, but will provide them with a livelihood and personal reward every day that they are in our industry.”
Finn estimated that even if the approximately 50 colleges and universities that offer an insurance program were able to graduate about 50 students each year — an optimistic estimate, he said — that would still leave an enormous shortfall of people ready to step in and do the jobs.
“Our students, through this program, will graduate with those skills in hand,” Standifird said. “In an industry that is in desperate need of talent, we’ll not only be providing them talent, but talent that is much closer to being job-ready than they’re going to find anywhere else. That’s one of the big motivations for doing this—to give our students a significant advantage going into the workforce.”
Added Loftin: “We are encouraged by the increasing interest of the millennial generation in the insurance and risk management industry which has historically been viewed by college graduates as boring or stale compared to some other careers. We are finding that most young adults today are simply unaware of what extraordinary opportunities exists within this industry that often times align more closely with their career, financial and, most importantly, their life goals.
“Therefore, we believe that it’s merely a matter of creating awareness and educating these young adults of the career benefits and opportunities that do exist. We believe that many colleges and universities are sleeping on this industry that has a dire need for qualified talent. In fact, those universities that do have insurance and risk management programs are experiencing 100 percent job placement rates in most cases. Therefore, we cannot think of a better opportunity to assist our industry in generating interest in this field than by partnering with Butler University in creation of a student-run captive.”
Source: Butler University
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