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2017 Risk All Star: Courtney Claflin

Captives: Writ Larger

The University of California, a massive institution with 10 campuses and more than 375,000 students, owned a captive but it was just getting started with it. As many large organizations do, the educational system was self-insuring many of its risks. As such, it had yet to take advantage of some of the risk transfer and investment opportunities that mark a more mature approach to captive use.

Courtney Claflin: Executive Director, Captive Programs, University of California

Courtney Claflin, a Minnesota native with decades of experience in insurance, arrived at UC a few years ago and started to change all of that. Forty-five days into his tenure, he laid out a $1 billion plan to house much more of the UC system’s risks in captives.

The board of directors of Fiat Lux, the system’s existing captive, loved Claflin’s plan and greenlighted it. Now they are very happy they did.

Claflin built the captive from four lines of coverage to 25 lines of coverage and is in the process of launching a handful of additional captives.

Instead of paying retail rates for excess coverage above its self-insured retentions, UC can now buy reinsurance at a much lower rate for what is in effect its own robust insurance company.

“By aggregating everything, we’ve got a big surplus position sufficient to create new programs that will make us even more money without having to go back to the University for a capital call,” Claflin said.

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And unlike a bank account or a trust that is typically used as a set-aside for self-insured retentions, the university can now use support from one line within its captive to prop up another if needed.

“The whole idea is that you can put all of these lines of coverage in the captive and they can provide ballast to each other,” Claflin said.

Emboldened by his initial success, Claflin approached the university’s Chief Investment Officer and asked him if he could build an investment portfolio, that could be structured using insurance investment parameters. That effort has also paid off for California taxpayers.

“We’ve created probably $25 million in new money that never existed before,” Claflin said of UC’s insurance-related investment returns.

“By aggregating everything, we’ve got a big surplus position sufficient to create new programs that will make us even more money without having to go back to the University for a capital call.” — Courtney Claflin, Executive Director, Captive Programs, University of California

There’s more.  Governor Jerry Brown informed the state’s educational system executives that they should do more to create synergies and accompanying savings for the state’s taxpayers.

Toward that end, Claflin is working with his risk management colleagues in the California State University System to create a cell captive within one of the new University of California captives.

Initially, the cell captive that UC is offering Cal State will house Cal State’s workers’ compensation program, its biggest line.

But eventually the hope is that Cal State, just like its sister UC, will eventually add additional lines to that captive.

“Cal State’s cell will be a start in that direction to maybe more efficiently finance their own organizational risks too,” Claflin said. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, perseverance and passion.

See the complete list of 2017 Risk All Stars.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession: Curt Gross

This director of risk management sees cyber, IP and reputation risks as evolving threats, but more formal education may make emerging risk professionals better prepared.
By: | June 1, 2018 • 4 min read

R&I: What was your first job?

My first non-professional job was working at Burger King in high school. I learned some valuable life lessons there.

R&I: How did you come to work in risk management?

After taking some accounting classes in high school, I originally thought I wanted to be an accountant. After working on a few Widgets Inc. projects in college, I figured out that wasn’t what I really wanted to do. Risk management found me. The rest is history. Looking back, I am pleased with how things worked out.

R&I: What is the risk management community doing right?

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I think we do a nice job on post graduate education. I think the ARM and CPCU designations give credibility to the profession. Plus, formal college risk management degrees are becoming more popular these days. I know The University of Akron just launched a new risk management bachelor’s program in the fall of 2017 within the business school.

R&I: What could the risk management community be doing a better job of?

I think we could do a better job with streamlining certificates of insurance or, better yet, evaluating if they are even necessary. It just seems to me that there is a significant amount of time and expense around generating certificates. There has to be a more efficient way.

R&I: What was the best location and year for the RIMS conference and why?

Selfishly, I prefer a destination with a direct flight when possible. RIMS does a nice job of selecting various locations throughout the country. It is a big job to successfully pull off a conference of that size.

Curt Gross, Director of Risk Management, Parker Hannifin Corp.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Definitely the change in nontraditional property & casualty exposures such as intellectual property and reputational risk. Those exposures existed way back when but in different ways. As computer networks become more and more connected and news travels at a more rapid pace, it just amplifies these types of exposures. Sometimes we have to think like the perpetrator, which can be difficult to do.

R&I: What emerging commercial risk most concerns you?

I hate to sound cliché — it’s quite the buzz these days — but I would have to say cyber. It’s such a complex risk involving nontraditional players and motives. Definitely a challenging exposure to get your arms around. Unfortunately, I don’t think we’ll really know the true exposure until there is more claim development.

R&I: What insurance carrier do you have the highest opinion of?

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Our captive insurance company. I’ve been fortunate to work for several companies with a captive, each one with a different operating objective. I view a captive as an essential tool for a successful risk management program.

R&I: Who is your mentor and why?

I can’t point to just one. I have and continue to be lucky to work for really good managers throughout my career. Each one has taken the time and interest to develop me as a professional. I certainly haven’t arrived yet and welcome feedback to continue to try to be the best I can be every day.

R&I: What have you accomplished that you are proudest of?

I would like to think I have and continue to bring meaningful value to my company. However, I would have to say my family is my proudest accomplishment.

R&I: What is your favorite book or movie?

Favorite movie is definitely “Good Will Hunting.”

R&I: What’s the best restaurant you’ve ever eaten at?

Tough question to narrow down. If my wife ran a restaurant, it would be hers. We try to have dinner as a family as much as possible. If I had to pick one restaurant though, I would say Fire Food & Drink in Cleveland, Ohio. Chef Katz is a culinary genius.

R&I: What is the most unusual/interesting place you have ever visited?

The Grand Canyon. It is just so vast. A close second is Stonehenge.

R&I: What is the riskiest activity you ever engaged in?

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A few, actually. Up until a few years ago, I owned a sport bike (motorcycle). Of course, I wore the proper gear, took a safety course and read a motorcycle safety book. Also, I have taken a few laps in a NASCAR [race car] around Daytona International Speedway at 180 mph. Most recently, trying to ride my daughter’s skateboard.

R&I: If the world has a modern hero, who is it and why?

The Dalai Lama. A world full of compassion, tolerance and patience and free of discrimination, racism and violence, while perhaps idealistic, sounds like a wonderful place to me.

R&I: What about this work do you find the most fulfilling or rewarding?

I really enjoy the company I work for and my role, because I get the opportunity to work with various functions. For example, while mostly finance, I get to interact with legal, human resources, employee health and safety, to name a few.

R&I: What do your friends and family think you do?

I asked my son. He said, “Risk management and insurance.” (He’s had the benefit of bring-your-kid-to-work day.)

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]