Baker Chair aids insurance education at SMSU

by Maria Hoover

Inside Business Editor

mhoover@sbj.net

Since 1993, Southwest Missouri State University has offered students the opportunity to major in insurance and risk management and it's one of the few schools in the nation to do so.

John Patton, associate professor of insurance in SMSU's finance and general business department, said that in the early 1980s, the school offered a finance major with an insurance option, and most of the insurance courses already were in place. The impetus to add an insurance and risk-management major came in the form of a sizeable donation from William G. and Retha S. Baker.

Patton said the Bakers' gift of about $250,000 was for the formation of a chair of insurance.

The Baker Chair of Insurance

"Chairs are often established for faculty members to either supplement salaries or supplement faculty members' research or (are) utilized in several different ways," Patton said. "In this particular case, they wanted a teaching endowment first, so they wanted things added that would tend to enhance the quality of the program for students."

However, before the chair could be established, matching funds from the local insurance and risk-management industry were needed. But what the school found, Patton said, was that many members of the industry weren't very interested in helping because the school didn't offer a major in the field.

"In 1993 the Board of Higher Education allowed us to offer a bachelor of science in insurance and risk management," Patton said.

By 1997, enough money a half million dollars was raised to activate the chair, and Patton was appointed to serve as the Baker Chair of Insurance.

Now, Patton said, the Baker Chair, which is part of SMSU's insurance and risk-management program, is an endowment worth close to $1 million.

A small portion of the fund pays part of Patton's salary as the Baker Chair of Insurance.

"Most of it has to go for the benefit of the students or the program, or to promote the program," Patton said. "We use it some to travel to Kansas City, St. Louis, Columbia, to go to insurance companies and to organizational meetings to promote the program to give us more visibility, meet with potential employers."

Funds also are used to bring nationally known individuals to visit the SMSU campus and to publish a newsletter.

"It enhances our program, the quality of it. We try to assist sometimes with research with some of the funds," Patton said. The program is producing a research journal, using input from insurance executives, and research articles from university professors from SMSU and other schools.

The Baker Chair of Insurance fund also pays for trips for the Alpha Lambda Chapter of Gamma Iota Sigma, the insurance fraternity. Stanley R. Adamson, PhD, associate professor of insurance, is the faculty advisor, a task that Patton also assists with.

Program benefits

While many people in the insurance and risk-management industry don't have degrees in that field, Patton said there are benefits for companies that hire individuals who do.

"One is that they understand the vocabulary of the industry and they understand how it works," Patton said.

Added Adamson, "We'll give them the basics, the foundations. One of the things is as companies try to become more efficient many companies have cut down on their training programs, and so if you can get one of our students, as opposed to a business major or an English major the training time, and therefore, cost, is a lot less because that person's up and productive for your company."

Since SMSU began offering the insurance and risk-management major, the program has experienced growth. Prior to 1993, Patton said, there were 15 to 20 students working toward the finance degree with the insurance option, and there were about 10 minors.

"Since then, we've been having 30 to 40 majors and this year we have almost 40 minors," Patton said.

The program also offers 20 scholarships, 13 of which are endowed, and the remainder are funded annually. In addition to seeking continual matching funds for the Baker Chair of Insurance, Adamson and Patton also are constantly seeking not only more students, but also the means to increase the number of scholarships and the amounts paid by the scholarships. All of the funding for the Baker Chair and the scholarships goes through the SMSU Foundation, Patton said.

"Our scholarship program, we feel pretty good about, because 20 with the number of students, the odds are very good," Patton said.

Industry stability

Adamson said that although there is some instability in terms of the insurance marketplace, with movement, availability and premium fluctuations, the insurance industry itself is very sound.

"I think you'll find, if you go back and look historically, that the insurance industry really is a very, very stable industry. If you go back and look at the Great Depression, there were many companies that went right through the Great Depression and didn't even lay off people," Adamson said.

The program offers internship opportunities with local and statewide agencies and organizations, Patton said.

As far as careers, Adamson said, "There are more non-sales jobs than there are sales jobs in the industry. But you and I as consumers probably just see the salesperson, or if we've had a wreck or something, we may see the claims adjuster."

Patton added that the program has a lot of students who don't end up selling at agencies. "They go into claims, they go into loss control, which is prevention and safety issues. There are actuaries and then there's this other area over here that's risk management, and that has just absolutely exploded overall," Patton said.

Risk management

Most companies try to identify their risks, whether they come from natural factors, operations, or the products they sell or install, Patton said.

"What risk managers do is to try to identify, from all of those sources, what could cause them losses," Patton said.

Then, they try to prevent those losses.

"In business school, we try to teach people the principles of running a business and making money. What we're trying to do in risk management is to help them preserve what they have," Adamson said.

Insurance is one way to pay for losses if they occur, but preventing those losses "may be as simple as making duplicate records and storing them someplace else. It may be as simple as, instead of having all your property located in one location, have two locations," Patton said.

Job market

In their efforts to increase student enrollment in the insurance and risk-management program, Patton and Adamson often find that prospects aren't aware of the program, which also offers courses in life insurance, employee benefits and financial planning.

"A lot of people will be business majors or general business majors, and until they take our first course in insurance, they'll know nothing about it, or they will have never considered it," Adamson said.

While Patton said it's hard to define an average pay for someone entering the insurance and risk-management field because the same company might pay more or less for the same job based on the location of the employee he said job opportunities are good.

"I don't know of any of them that haven't gotten a job in the industry in the last two or three years that wanted it," Patton said. "And the pay was reasonably good."