The Endless Ways to Launch an SRB
Butler University’s insurance company is looking to radically change the development of insurance workers in the marketplace. In August 2017, Butler University opened its own SRB in the form of a student-run insurance company. The MJ Student-Run Insurance Company, Ltd. insures the private college’s assets such as the university’s live mascot bulldog Trip, rare books, fine art, and an observatory telescope. The student-run operation, known in industry terms as a “captive insurance company,” is an unprecedented insurance enterprise that offers tangible experience students can take into their professional careers.
“This is the kind of thing you don’t necessarily learn in a classroom,” said previous student CEO of MJ Student-Run Insurance Derek DeKoning. “It’s not just selling life insurance around the kitchen table.”
Butler’s Lacy School of Business created the insurance company as a way to give students a hands-on experience to prepare them for an industry that anticipates needing 400,000 new employees by 2020. Zach Finn, clinical professor and director of Butler’s Davey Risk Management and Insurance Program and supervisor for the SRB, said approximately 1,900 American universities have accounting programs, and 900 have finance programs, but only 82 offer insurance and risk programs.
This program allows students the opportunity to graduate with two internships and run an insurance company, as well as be exposed to everything that entails. Not only does it provide an incredible learning experience for students, but it also makes a profit for the university. As Finn states himself, “Butler will save and potentially make money” by someday going beyond Butler’s boundaries to insure others.
Although Butler University’s SRB is unique in its business model, that’s not the only distinct aspect of the SRB. Unlike other programs, the money to start Butler’s captive insurance company didn’t come from university funding. The initial cash capital came from a $250,000 gift in 2015 from MJ Insurance and founder Michael M. Bill.
MJ executives were already impressed with the consistently talented students graduating from Butler University, and because of this previous relationship, the company wanted to expand its affiliation with the university and create a program that would enhance the typical educational experience. This SRB was able to launch these students’ education to new heights and expose them to an out-of-classroom experience that employers value deeply.
How were they able to do so? It all goes back to experiential learning.
The students managed the company and even helped launch it in 2017 by attaining licensing approval from the Bermuda Monetary Authority. Undergraduate students were able to take the concepts they learned in their studies and apply them to a real-life setting.
For example, by creating the company, Butler students learned the importance of loss control. The students were tasked with navigating the entirety of Butler’s campus and taking inventory risks of every product the university owned. Throughout the process they developed mitigation strategies to deal with potential hazardous situations, such as floor drains directly above a rare book collection on campus. By doing so they were able to identify areas in which the university was underinsured, such as the observatory that lacked $1 million in coverage.
Because of this incredible learning experience, the program has already begun to attract supporters from all over the insurance industry. The company already has the endorsement of Aon, one of the world’s largest insurance brokers.
“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, for a Butler Newsroom article. “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.”
Aon isn’t the only company thrilled with this SRB. MJ Insurance is also extremely happy with the results of the program so far. “We hired one of their students who worked on the captive [Butler’s SRB]. 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 who have been in the industry for a couple of years.”
Colin MacNab, executive vice president of property and casualty at MJ Insurance, was able to serve as a mentor for the first “Captive Insurance” class at Butler and completely agrees with Loftin about the impact of the program. “I can attest that the experience these students gain in creating the captive is unparalleled, and they 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,” he said.
Even though Butler University’s SRB just began in 2017, it has already gained a great amount of success. The company originally planned to begin operations in 2019. However, the students in Butler’s insurance degree program quickly assembled the program to commence their unique learning experience. In fact, Zach Finn, the faculty adviser for the SRB, believed “maybe other universities were going to try to beat us to the punch” to create this special program.
Although Butler had an incredible support staff and students that certainly propelled the company to success, the company also would not have been able to succeed if it weren’t for the support from MJ Insurance. Every founder of an SRB has a unique starting point from which they launch their SRB, and Butler’s is distinctive in the relationship the company holds with MJ Insurance and the positive impact MJ Insurance had on the organization’s success. The sizable monetary contribution made it possible to launch the program and sustain it with enough capital to successfully operate until it could generate its own income. Equally as important, the SRB benefited from the support network of alumni and leadership within MJ Insurance, which continued to support and help the students within the program.
Thus, if it weren’t for the support of MJ Insurance and the continuous help provided to the SRB program, it is certainly possible that the MJ Student-Run Insurance Company, Ltd. would not be operational today. This SRB was able to launch its program by leveraging the university’s pre-existing partnership with the insurance company. Although many SRB programs do not begin their programs in this fashion, this is just one of many possible manners in which an SRB program can launch. Butler University’s SRB is a perfect example of how an SRB should always tap into every possible resource available to it when first getting its business off the ground.
Butler University’s SRB creation is not the typical start-up story for most SRBs. Usually, SRBs are founded by financial and educational support from university administrators and professors who aid student managers throughout the process. From the onset, the SRB may receive financial funding from the university in the form of a gift or a loan repayment, and it may receive some form of supervision or guidance from university staff.
