Butler University’s MJ Student-Run Insurance Company, which will insure items such as the University’s live mascot bulldog Trip, rare books, fine art, and observatory telescope, has received licensing approval from the Bermuda Monetary Authority, moving it one step closer to opening.
The student-run operation—known in industry terms as a “captive insurance company”—is scheduled to officially begin work on August 1.
“This allows us to take the premiums, that in the past were going to an insurance company, and have them stay in the captive, to be reinvested in loss control,” said Zach Finn, Clinical Professor & Director of Butler’s Davey Risk Management and Insurance Program, who will supervise the students. “Butler will save and potentially make money” by someday going beyond Butler’s boundaries to insure others.
Butler’s Lacy School of Business created the insurance company as a way to give students hands-on experience that will prepare them for an industry that anticipates needing 400,000 new employees by 2020. Finn said approximately 1,900 American universities have accounting programs, and 900 have finance programs, but only 82 offer insurance and risk programs. Risk Management and Insurance majors at the Lacy School of Business will not only graduate having had two internships, but they will have run an insurance company and participated in all aspects of it.
The money to start Butler’s captive insurance company came from a gift from MJ Insurance and Michael M. Bill.
“We’re thrilled to not only be involved from a financial perspective, but also as part of the education process,” said Colin MacNab, Executive Vice President of Property & Casualty at MJ Insurance. “I served as a mentor in the first Captive Insurance class at Butler, and can attest that the experience these students gain in creating the captive is unparalleled, and are coming out of school prepared to make an immediate impact. One of the students who served a key role in preparing and delivering the application to the Bermuda Authority is joining MJ as a full-time employee after she graduates in May, and will fast track due to the knowledge and experience she brings with her Butler degree.”
Finn said that in addition to teaching the business students about insurance and risk management, business students also will learn about things like the planets through their work at the planetarium and rare books and how to preserve them, thanks to their time spent at the library.
“I wanted to pick coverages where not only would the students learn about insurance and risk management, but they would learn about other things,” Finn said. “So we’ve learned about poets, paintings, planets and more. I am going to leverage the great liberal arts education they receive at Butler.”
Under the terms of its license from the Bermuda Monetary Authority, the captive insurance company will be able to pay out losses of up to $250,000 a year.
Finn said the company chose to be licensed in Bermuda based on the student’s objective and subjective analysis of the regulatory and tax environment in multiple domestic and international domiciles. He said the students who have been working to start the captive company saw the result of their efforts in early April when they appeared before the Bermuda Monetary Authority to get the company licensed.
“They have Fortune 500 companies that have to go through five and six rounds of question-and-answer sessions to get approved by the Bermuda Monetary Authority,” he said. “We were approved right out of the gate.”
Students and faculty also had the opportunity to meet with the Bermuda Business Development Agency and “we could not have felt more welcome on the island,” Finn said. “Bermuda is a key pillar of the Global insurance market and we are excited that the captive gives us a seat at the table.”
The new company has the backing of Aon, the world’s largest insurance broker.
“Aon fully embraced the opportunity to do more than just manage the student-run captive with Butler University,” said Don Ortegel, Resident Managing Director at Aon Risk Solutions Chicago and Butler’s strategic account manager. “We view this as a great opportunity to demonstrate our commitment to support and educate the Butler students. The Butler University captive partnership fits nicely with our existing Launch and Business Internship Programs and Aon’s recently announced Chicago apprenticeship program to train and attract talent to the Industry.”
KPMG will be auditors of the captive.
“When I first learned of the Butler University student-run captive, I found their story very interesting and compelling,” said Eric Heinrichs, Managing Director at KPMG in Bermuda and Lead Engagement Partner. “I very much look forward to working with the Butler students on this endeavor and exploring the different ways that we can work together to further help students taking part in this program to have a rewarding and fulfilling experience.”