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Entrepreneurial students gain real-world insurance chops

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Risk management students at Butler University in Indianapolis are establishing what is believed to be the nation’s first student-developed and -run insurance company.

MJ Student-Run Insurance Co. Ltd., a Bermuda captive, is scheduled to begin operations Aug. 1, and will be managed by Aon Captive and Insurance Management, a unit of Aon P.L.C.

It will insure university risks, such as its dog mascot and rare book collection, as well as risks associated with Indianapolis’ startup community, which “have products and capital sitting on the sideline because they can’t get insurance,” said Zach Finn, director of Butler’s Davey Risk Management & Insurance Program.

That is just one example of how universities are responding to help students develop skills that will help them in the changing risk management environment.

Keith Yager, manager of insurance risk management at Alcoa Inc. in Pittsburgh, who graduated from the risk management program at Erie, Pennsylvaniabased Gannon University six years ago, said it helped him prepare for his current position by offering courses that were “offered with the understanding that business today is conducted more on a global basis than in the past.” 

The program also offered the opportunity to gain “real-world” experience by working, for instance, with nonprofits or the local Erie Insurance Co., and the opportunity to attend national conferences of the New York-based Risk & Insurance Management Society Inc., he said.

Ryan Pierrard, manager of property insurance at Bayer Corp. in Pittsburgh, who graduated from the Gannon program about 15 years ago, said the courses he took there “helped me, so I wasn’t surprised at what I was getting into,” which he said was the case with some others with whom he has worked.

In addition to teaching about insurance, Gannon University’s program teaches the engineering aspects of the business, including industrial safety and environmental science, said David Smith, director of the insurance and risk management program at the university’s Dahlkemper School of Business.

“Everybody needs a good dose of finance and a good dose of statistics,” which are offered to risk management students at the Wharton School of the University of Pennsylvania in Philadelphia, said Olivia S. Mitchell, professor of insurance/risk management and business economics policy at the program.

The program also conveys to its students that risks “go beyond the math” and that you have to consider an organization’s risk culture as well, she said.

In addition, “We talk about the tools of risk management,” in insurance, financing and litigation, she said.

“Students need a lot of the same skills they’ve always needed, including great communication and problem-solving skills,” said Kathleen McCullough, professor in risk management and insurance at Florida State University’s college of business in Tallahassee, which also give its students the opportunity to “really engage” with the industry.

And the risk management program at Olivet College in Michigan actively brings risk managers into its classrooms “to talk about some of the things they see on a day-to-day basis,” said Tom Humphreys, director of the risk management and insurance center at the school.

Companies are hiring risk management interns, he said.

“More and more large companies say, ‘We’re really looking to bring in students to learn what risk management is from the corporate perspective, as opposed to the insured side’,” he said.

In the classroom, the rising threat of cyber risk is discussed, Mr. Humphreys said.

“They don’t necessarily have to be an expert on technology,” but students must understand the risk, what they can do to deal with it and when they must rely on other experts, Mr. Humphreys said.

“The nature of risks is changing, to some extent, as there are a lot of correlated risks that are emerging,” including cyber, which is discussed with risk management students at St. John’s University in New York, said Mark J. Browne, faculty chair of the university’s School of Risk Management.

“We discuss risk pooling in our classes and situations in which risk pooling is difficult because of correlation across risks in risk pools,” he said.