Monday, February 26, 2024

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Butler re-domiciles captive to Vermont, transforms into cell company

Butler University’s student run captive insurance company has completed a domicile move to Vermont and been transformed into a protected cell company as it eyes collaboration with other educational institutions.

Butler first formed its captive in Bermuda in 2017 as the MJ Student-Run Insurance Company, Ltd. It insures livestock mortality, inland marine risk and product liability.

Since inception, the captive has played a key role in supporting students on the Lacy School of Business risk management and insurance course, giving them hands on experience of underwriting real loss exposures, undertaking feasibility studies and business plans, analysis losses and adjusting claims.

Vermont’s captive regulators licensed The Davey Captive Insurance Company, managed by Hylant Global Captive Solutions, on 16 November, 2023.

Speaking on the Global Captive Podcast Victor Puleo, chair of risk management and insurance at the Lacy School of Business, and Craig Caldwell, Dean at the School, explained the latest evolution of the captive.

The captive’s formation in 2017 was based on a five-year feasibility study so having reached the end of that business plan cycle, they reached out to Claire Richardson, a captive consultant at Hylant, who had been a student at Butler and president of the captive in its early years.

“We got together and said: ‘What’s the next step? There is so much more we can do with this captive,” Puleo said.

“We had Hylant complete a strategic review and part of that was reviewing potential domiciles, including staying in Bermuda.”

Students in the risk management class completed the domicile review and Vermont was in the final two.

Puleo explained that some of Butler’s business partners have captives domiciled in Vermont, while the State’s former captive regulator David Provost had previously spoken at the University and its current deputy commissioner for captive insurance, Sandy Bigglestone, had also visited the campus.

Cell captive

Aside from the domicile move, the other big change for Butler’s captive is the change of type into a sponsored captive insurance company, known as a protected cell company (PCC) in other jurisdictions.

“By having the cell structure in the model that we’ve redomesticated to Vermont it does allow us a couple of opportunities,” Caldwell said.

“One is the education of our own students. They’re going to get an opportunity to explore some new techniques and new ways of reducing total cost to risk. But we also then have a curricular piece that we are well positioned to share with other universities.”

Butler is a private university, but Puleo explained most of the risk management and insurance courses in America, particularly the larger ones, are at state schools.

It is Butler’s proposal to offer use of the cells to these state schools so they can be included in their own curriculum and courses.

“What we really wanted to do is give a platform for the other universities with risk management and insurance programmes, where they could use a cell in their curriculum,” Puleo said.

“They could literally adopt a course in captive management and actually help to insure the risk at their universities – do a feasibility study, do the analysis, the whole nine yards.

“That is a huge educational opportunity for the students at the other universities that may not be getting that experience because they don’t have a captive.”

Puleo said they are not excluding universities that do not have risk management and insurance programmes, so if a risk manager at a university does not have their own captive but wanted to utilise a Butler cell that would be a possibility.

“Our goal though really is to expand to the undergraduate and graduate space in risk management insurance, the world of captives and actually have them use this experiential model that was developed by Butler University.”

Richardson believes this latest evolution of the Butler captive journey is a demonstration of the broader opportunity present in higher education for captives.

“The sponsored cell structure is going to aid in not only bringing the captive world into higher education, but also higher education to captives,” she said.

“We are going to be able to get really involved with the students and work not only with Butler students, but as the captive structure grows and evolves bringing on other schools’ and universities’ cells to the structure.

“So while we’re focused here on Butler and want to make sure Butler students are serviced and the Butler captive is also up and running and very significantly innovative, the next portion of that is bringing in additional students to Butler University, to other universities and showcasing the wonderful industry that captive insurance is.”

Listen to the full podcast with Butler’s Craig Caldwell and Victor Puleo and Hylant’s Claire Richardson on Captive Intelligence here, or on any podcast app. Just search for ‘Global Captive Podcast’.