SOUTHAMPTON, Bermuda — Initiatives such as the student-run Butler University captive insurer could serve as a model to engage millennials and help solve the insurance industry’s looming talent crisis.

Nearly 400,000 positions will be open by 2020 as baby boomers retire from the insurance industry, creating a “talent cliff,” which is why such projects are critical, George Leite, head of business development at Aon Insurance Managers (Bermuda) Ltd., said Monday at the Bermuda Captive Conference in Southampton, Bermuda.

“It was completely driven by millennials,” he said of the Butler University captive, which is domiciled in Bermuda and managed by Aon.

MJ Student-Run Insurance Co. Ltd. insures “weird” university risks such as its dog mascot Trip and its bomb-sniffing dog Marcus for its police department, said Derek DeKoning, student CEO of the captive and a risk management and insurance and management information systems double major at Butler University in Indianapolis.

“This was done because it can be very expensive to replace a mascot, but more importantly because of the public relations that it created for us,” he said, adding that the students are exploring an endorsement that would not only provide coverage if its bomb-sniffing dog died in the line of duty, but also allow them to donate a bomb-sniffing dog to a police organization. “It’s just basically trying to come up with new and creative things that we can involve students in that will help them get more real-world experience.”

The captive also covers the first $150,000 worth of university fine arts and marine risks, including the oldest and largest telescope in Indiana, which had been previously valued at $1 million under the university’s insurance policy but has an actual value of $2.5 million, he said.

The students chose Bermuda as a domicile after conducting an extensive feasibility study, which got off to a positive start when Bermuda was one of only two domiciles responding to the students’ initial inquiries, Mr. DeKoning said.

The regulators’ response to the students’ inquiry demonstrated two strengths of Bermuda as a domicile: collaboration and responsiveness, said Jeremy Cox, CEO of the Bermuda Monetary Authority.

“It was wonderful that students could reach out and see that directly,” he said. “That’s the next generation.”

By running the captive, the students are learning about all aspects of risk management, including rate-making, underwriting, reinsurance and loss control, Mr. DeKoning said. For example, in a loss control effort driven by their research, a leaky drain that threatened that expensive telescope is being fixed, he said.

“Butler University students can replace two to four of your baby boomers who are retiring,” Mr. DeKoning said. “We are working not just to build students and graduates, but professionals.”

“I think one of the things we learned is that it takes a dedicated staff that is prepared to take on this whole process,” Mr. DeKoning said when asked about lessons learned in setting up a student-run captive. “It takes a dedicated staff and an administration that is willing to take these kinds of risks. We have over $250,000 of capital. The university is putting a lot of stock in students to manage both that capital and these risks, and that’s not something you can typically find at some larger institutions where these risks are too large or too public to allow students to have a major hand in that. It’s a blend of the administration being open to a project like this and the right staff of professors in place to see it through and make it happen.”

The biggest issue Mr. DeKoning said he sees in engaging not just millennials but others is a lack of knowledge about what the insurance industry does and how it functions.

“There’s not even a perception to be had, because there is not even knowledge that this industry exists,” he said.