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A Focus on Janice Abraham and United Educators Insurance RRG

Janice Abraham-UE Logo-SF
August 23, 2017

Captive.com recently spoke with Janice Abraham, president and CEO of United Educators Insurance (UEI), a Reciprocal Risk Retention Group (RRG). Ms. Abraham joined UEI in 1998, about a year and a half after Congress passed legislation expanding the 1981 federal law that first authorized RRGs. An RRG is a group captive, which, unlike other captives, can provide all commercial casualty coverages—except workers compensation—to member-owners throughout the United States after meeting the licensing requirements of just one state. Read on to hear from Ms. Abraham.

What kinds of coverages does United Educators provide to its policyholder-owners?

We offer primary general liability, buffer general liability, excess, or umbrella. We offer educators legal liability, which is a product we created, and which is directors and officers and employment practices liability. Others would call it errors and omissions, but we call it failure to educate. We have a liability policy covering internships, professional liability.  Any time an institution is accused of doing something wrong, our liability policies can step up and support them.

To what do you attribute United Educators' growth?

We have grown because educational institutions need us. They need us, a group of individuals who are experts in the area and who try to look ahead and find out what the risks are going to be and provide risk management materials. So, we have grown because there is a need. When I came here in 1998 as CEO, we had about $25 million in premium volume. We'll be close to $200 million, if not by the end of this year then by next year. Excellence, focus, specialization, filling a need, and doing it better than anyone else [are the reasons for our success].

What are the advantages of forming as a risk retention group as opposed to a traditional captive insurance company?

Our member-owners are all in the same industry. So, we have a very clear line of sight of what we are doing. So, we feel that an RRG is an effective way of putting members' resources on risk management and claims management, while trying to keep our costs as low as possible, but really developing an expertise in the education space.

Tell us about United Educators' more than 1,600 policyholder-owners.

We cover all types of educational institutions. That means kindergarten through 12th grade, public schools, independent schools, community colleges, small colleges, large research institutions, and land-grant schools. In short, we really cover the entire waterfront of American education, including educational institutions in locations such as Guam, Maine, Alaska, and Hawaii. And it is global coverage. A claim can happen anywhere in the world, and we will provide coverage. Our risk management covers situations all over the world, as well. 

What are the advantages of an educational institution joining United Educators as opposed to getting coverage in the traditional market?

Number one, you are with a large group of like-minded educational institutions. Number two, you have close to 200 people who are experts in this space. All we do is education. We are not focused on manufacturing, trucking, or other kinds of business. All we do is to become experts in education. Thirdly, we understand educational institutions, and we know that stability is important. I was a college business officer, so I know a 20 percent premium increase in 1 year, a 15 percent drop in another, and a 40 percent increase in a hard market are not the way colleges and schools run. Stability, knowing that we are going to be there, is very important. And we provide the coverages educational institutions need: coverages for traumatic brain injuries and sexual molestation and sexual assault, intellectual property coverage. We understand these and are able to provide the coverage. 

You are working with true experts in education and can prevent bad things from happening. We have paid dividends for over 7 years. We have a strong financial footing. We have an A rating from A.M. Best. We have a great capital position and deep expertise. Our rates are fair, and policyholders get exceptional risk management services. As we think about the total cost of risk, we are by far the best market around.

Some captives, not many, have changed domiciles. United Educators has stayed in Vermont during its entire time. How come?

We believe it is best in class. Vermont has the most sophisticated captive regulators. They understand the risks. They ask the right questions. They are not easy, but they are very fair and very open to talking about issues.  

Looking beyond United Educators, there are about 230 RRGs today. The number of RRGs has dipped a bit in recent years. At their peak a few years ago, there were more than 260 RRGs. Any feel for why the numbers have gone down a bit, and do you see the industry changing?

I don't know why the numbers are down. I do know our retention rate ranges from 97 percent to 99 percent. That is because we have not strayed from our core mission of helping to prevent bad things from happening. We have stayed very true to why we were started, and [we continue] to invest in the resources that make a difference. Even though we have had a generational change—all the original founders of United Educators have retired and are not at their institutions—the new and subsequent generations know why we exist. We are part of them; they own us. We stay focused on providing the prevention and repair that educational institutions need.

Five years after Congress passed the original Risk Retention Act, federal lawmakers expanded the law so that RRGs can cover all commercial casualty risks, except workers compensation. For a number of years, some segments of the RRG community have urged Congress to amend the law so that RRGs can cover property risks. Do you see that happening?

I think the insurance industry is not as forward leaning and innovative as it needs to be. Congress passed the Risk Retention Act because there was a dire need. The barriers to entry into insurance are extraordinary. We serve an industry—education—that is ripe for disruption. Insurance also is ripe for disruption. There are early signs of that happening. There is an opportunity to serve educational institutions and to serve our market. I have testified before Congress. We have tried to bring innovation and focus to the insurance industry. But a lot of commercial insurers say they are all for competition until it actually competes with them. We are supportive of having innovative ways to meet risk transfer and risk management needs. Expansion of the Risk Retention Act to allow RRGs to cover property risks is part of that innovation. The first priority is to make sure that captives are well capitalized, that they are there for the long term. But we also believe there is an opportunity for innovation. Congress has not been supportive of that, primarily because the big commercial insurance companies are not supportive and are not open to innovation.

Any changes ahead for United Educators?

We continue to look for growth. We are making big investments in data analytics. We have 30 years of our own data on claims, as well as underwriting experience. Johnny Gilbert, a United Educators vice president, is building up a team of data scientists, so we can better understand, harvest, analyze, and put our data and external data to work. We believe we can use our expertise in the education space to better serve in developing products and risk management materials and helping in litigation, arbitration, and mediation.

Are you optimistic about the future of United Educators?

I am optimistic about United Educators because we have stayed true to our mission. We are making big investments in analytics and risk management. We have online courses where thousands of students, faculty, and volunteers and administrators are, for example, taking our classes on sexual assault and sexual harassment. There is nothing I am more optimistic about than this organization.

How do you stay up to date on what is going on in the insurance field?

We are all involved in a lot of trade associations. I continue to be on the board of the PCI [Property Casualty Insurers Association of America], which is a terrific trade association. We are involved with the National Risk Retention Association. Mike Horning, our chief financial officer (CFO), is involved with the Vermont Captive Insurance Association. We believe in trade associations and institutions. We send our staff to a number of institutions for training programs. I'm a trustee at two educational institutions. I've spent a lot of time thinking about education risk, as well as the insurance space.

How did your educational background affect your career?

I'm a finance person by training. I was a CFO at educational institutions. Back in 1997, the United Educators' board, in looking for a CEO, had the opportunity to look for an insurance expert and teach her education or hire an education person and teach her insurance. At that time, I sat on the board of a captive domiciled in Hawaii, so I knew something about insurance. Fortunately for me, the board chose the latter and not the former. As we grew, my expertise in insurance grew, as well.

Looking back at your career, what have been the most rewarding experiences?

Being part of an organization that is actually making a difference for educational institutions and building a team of experts within United Educators. It is an amazing group of 200 people. The executive team is second to none. That has been by far my most rewarding experience.

Since 1998, Ms. Abraham has overseen the tremendous growth of Vermont-domiciled United Educators, whose premium volume is soon expected to hit $200 million, up from $25 million soon after its 1987 launch, and is one of the largest of the roughly 230 RRGs now operating. With about 200 staffers, United Educators provides not just insurance coverage but also risk management services to its 1,600 policyholders—schools, colleges, and universities. Prior to joining United Educators, Ms. Abraham was a CFO at Whitman College in Walla Walla, Washington, and she has held various positions at Cornell University in Ithaca, New York. Ms. Abraham is the author of Risk Management, An Accountability Guide for University and College Trustees, which encourages board oversight of enterprise risk management activities at their institution.

See also the related Captive.com article titled "Risk Retention Group Expansion: A Modest Yet Critical Proposal."

(The photo above of Ms. Abraham and the United Educators logo are courtesy of United Educators and used with its permission.)
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