Founded in 2016 and recognized as the world’s first student-run captive, the unique captive insurance program at Butler University in Indianapolis, Indiana is entering its fourth year. The program has been an incredible learning opportunity for students at the University’s Lacy School of Business. Over the next few years, the MJ Student-Run Insurance Company, Ltd., will expand its coverage, including third-party coverage. Here is a look back – and a look forward — at the program, which represents a model that numerous other captive insurance programs are based upon.
In 2016, students enrolled in the Davey Risk Management & Insurance Program at Butler University were presented with a unique learning opportunity. The Director of the program at the time, Zach Finn, believed that students would benefit from a hands-on and practical approach to learning about insurance careers. The MJ Student-Run Insurance Company, Ltd., was born. Finn serves as Director of the company, which is managed by students. The company is domiciled in Bermuda; Bermuda was chosen after exhaustive feasibility research by students, who determined that the country’s business development and regulatory standards were a perfect fit for the captive. The Bermuda Monetary Authority (BMA) issued a license to the company in 2017.
The MJ Student-Run Insurance Company self-insures several risks for Butler University, including its fine art collection, other student-run businesses, and Butler Blue, the University’s bulldog mascot. In just four short years, the program has served as a disruptive market force as well as a springboard for innovation in insurance career education. Students involved with the program are equipped with skills and knowledge they can take with them as they enter the professional workforce. Ultimately, such programs will help to reverse a nationwide trend of low recruitment rates for professionals in the insurance and risk management industries.
Already a successful venture for students at Butler University, the student-run captive and its participants are continually seeking new opportunities. One of the emerging opportunities for the program is the concept of third-party coverage. Municipalities and universities across the country have created business incubators, which help foster start-ups and similar entrepreneurial efforts. Unfortunately, these burgeoning businesses often have a difficult time finding traditional insurance coverage, or may not be able to afford traditional coverage. Captive insurance programs like Butler’s, then, may provide solutions.
According to the BMA, MJ’s licensing authority, a captive must be classified as a Class 2 insurer in order to provide coverage for incubator and start-up ventures. This classification would allow MJ to write up to 20 percent of its business as third-party risks. Students in the program are working closely with officials in Bermuda to achieve this distinctive classification. It is expected that with a revised business plan and additional experience, MJ Student-Run Insurance Company will receive its Class 2 insurer license within the next two to four years, and will then be able to write third-party risks.
Caitlin Morgan Captive Services provides clients with captive insurance solutions supported by years of experience in establishing the successful formation and implementation of a wide range of captives. To learn more about how we can help you, please contact us at (317) 575-4440.