Geico has its gecko. Progressive has Flo.
And Butler University’s newly launched insurance company has campus mascot Blue the bulldog as its face to the insurance-buying world.
The MJ Student-Run Insurance Co. Ltd. opened for business on Monday to insure the private college’s assets. What’s believed to be the first of its kind insurance company gives students in Butler’s Davey Risk Management & Insurance Program deeply experiential learning about the industry.
“This kind of thing you don’t necessarily learn in a classroom,” said student CEO of the new insurance company, Derek DeKoning. “It’s not just selling life insurance around the kitchen table.”
Originally planned to launch in 2019, the company was assembled quickly by more than 40 students in Butler’s insurance degree program. They were hungry for the opportunity to vault beyond book learning, to build and operate an actual insurance company before entering the job market.
“We got the notion that maybe other universities were going to try to beat us to the punch,” said Zach Finn, clinical professor and director of the Davey Risk Management & Insurance Program.
Covered by this so-called captive insurance company – an insurance company put together by an organization to insure its own risks – are everything from Butler’s rare book collections to student-run businesses to 40 pianos on campus.
The student-run company will pay up to $250,000 in losses per year. Butler pays the student-run company $72,000 in annual premiums.
The company had its origins in a $250,000 gift in 2015 from Indianapolis-based MJ Insurance and its founder, Michael Bill. MJ executives said Butler has consistently graduated students well-trained to jump into the insurance industry.
“We hired one of their students that worked on the captive. She works for us now and we’ve been extremely pleased with her skill set,” said Jon Loftin, president and CEO of MJ Insurance.
“They’re coming out of college job-ready. In fact, more job-ready than some employees that have been in the industry for a couple of years.”
Loftin said the insurance industry faces a “massive deficit” of employees as Baby Boomers retire – perhaps 400,000 people by 2020.
Yet, by Finn’s reckoning, there are relatively few insurance and risk management programs at universities – about 82 programs cranking out 38,000 graduates annually. Not only are not enough formal paths for careers in the insurance industry, millennials may shun it as boring and think their only opportunity is in insurance sales, which comprise only a small part of the industry. There are, for example, risk and benefit manager jobs, “all manner of jobs that have nothing to do with directly selling insurance,” Finn said.
Currently, just under 27 percent of insurance industry professionals are under the age of 35, according to insurance talent organization Jacobson Group.
“It’s an existential crisis for the insurance industry,” said Finn, who previously worked as risk manager at food company J.M. Smucker Co. and for NCR Corp. in Dayton, Ohio.
Finn, who was inspired to enter the industry by his father, an insurance agent, credits his degree in insurance at Indiana State University for helping open the doors to career possibilities in the industry. And Butler’s student-run insurance company should go even further in helping students not only visualize other roles in the industry but to gain first-hand experience.
For example, creating the company allowed Butler students to learn the role of loss control. Students took inventory of risks facing Butler’s campus and looked at mitigation strategies. They discovered there were floor drains directly above the stacks of a rare book collection on campus.
“We’re cataloging the rare book collection we’re insuring. None of my students even knew we had a rare book collection,” Finn said.
And a review of the university’s observatory found that it was underinsured to the tune of about $1 million.
Students working at the company also will make presentations to students who run their own businesses as part of an entrepreneurship program, Finn said.
Butler’s insurance and risk management students also participated in the formation of the student-run insurance company. Two teams of students researched where to domicile the company: one team looked at states such as Oklahoma and Vermont while the other looked at Bermuda, a bastion for insurance.
“I said, ‘Email the regulators,’” Finn recalled.
Curiously, none of the domiciles responded except for Vermont and the Bermuda Monetary Authority. “You just don’t get that type of learning in a textbook.”
Students also participated in a feasibility study, saving perhaps $50,000 it would have cost to hire an outside firm. They even developed requests for proposals for outside firms – picking insurance broker Aon, which agreed to take on students as interns.
“We just hired our first risk manager. We had our (Butler) CFO doing it for years,” added Finn.
More progressive companies have hired his students, with one of them on track to make more than $100,000 right out of college.
Yet some insurers and brokers won’t hire without five years of experience.
“You just did it (set up company) with kids? Witchcraft!” they say, Finn added.
A 'sexy' job?
It’s not witchcraft. Company student CEO and risk management/information systems major DeKoning returned last week from Bermuda, where The MJ Student-Run Insurance Co. Ltd. held a board meeting and met with Bermuda officials.
Finn would like to build stronger ties to Bermuda insurance firms, in part as a way to improve the educational experience at Butler and perhaps even to the extent it could result in economic development in Indiana.
While Indiana has one of the nation’s highest concentrations of insurance and risk management graduates, it could grow even more if it built a larger insurance workforce. One place to start, Finn says, is to educate high school guidance counselors about the industry.
“Insurance is a sexy job in Bermuda and in London,” Finn said. “For some reason our students aren’t getting that message.”