Can Iowa universities make insurance a better career choice?
second in a series
Jim Lewis wants kids these days to know that insurance is exciting.
A former marketing executive, Lewis last became director of the University of Iowa's Vaughn Institute of Risk Management and Insurance. His arrival comes as insurance leaders around Des Moines hope the state's universities and colleges can churn out more talent.
Executives in Des Moines metro's insurance industry, concentrated in a slow-growth state, know that competition for each crop of graduating students is fierce. They want more candidates. And that means they want more students to think about insurance early in their college careers.
More: Life Insurance Statistics and Industry Trends 2024
Lewis admits his job is difficult. Business majors usually dream of making money in other fields.
They watch “Wall Street” and envision careers in Manhattan. Or “Silicon Valley” and the California dream. Or the more subtly named “Industry”, a British drama about the investment banking industry.
Showrunners aren't presenting many prestige dramas about the lives of underwriters and actuaries.
“We're going to have to do something quite dynamic and aggressive as an industry to fill the pipeline,” Lewis said.
It might not sound very dynamic, but Lewis said his firsthand perspective is important: In mid-January, as the spring semester began in Iowa City, he visited introductory finance courses. He explains why students need to consider the Risk Management and Insurance major, a program the university relaunched 40 years after it was eliminated by a cost-cutting dean.
Lewis said there was a big comeback last fall as insurance executives lobbied for more young employees. The initiative comes as other Iowa universities are trying to expand their insurance programs. The Iowa Economic Development Authority has also partnered with colleges and companies to create an insurance internship program for freshman and sophomore students.
Des Moines finance industry downturn highlights need for new talent
Schools are responding to the state's labor force problem.
After decades of employment growth far exceeding the national average, the Des Moines metro has shed about 4% of its financial activity jobs since July 2017. This comes as there has been a 9% growth in jobs in financial activities overall in the country.
While most of Des Moines' jobs were lost because Wells Fargo & Co. downsized its mortgage division, the metro's insurance industry is not growing as fast as it used to. Rather than leading the nation, Des Moines has been adding insurance jobs at about the same pace as the entire country over the past six years.
Des Moines has lagged behind fast-growing cities like Phoenix, Atlanta and Orlando in insurance job growth.
More: High car insurance prices are worrying Americans. See who is the highest and lowest paid in America.
The problem has sparked debate among local corporate leaders. Does Des Moines need to recruit more companies that can add jobs? Or does the state need to produce more workers whose availability could encourage companies to expand here?
Lewis believes the latter is the correct answer.
“That's what the industry is asking us to do,” he said. “Bring them more talent.”
With risk management skills, 'you're a more attractive employee'
As an academic offering, risk management is about learning how to evaluate a company's vulnerabilities. Professors teach students how to identify areas where companies are at risk, which risks are most dramatic and what managers can do in response.
The major can help students prepare for any industry, Lewis said. But it's especially helpful in insurance, where employers have to price in contracts years in advance before they even know what that contract will be worth.
Typically, professors told the Des Moines Register, insurance companies don't require college graduates who have studied their industry. Instead, companies look for students who have studied business management, human resources, marketing, accounting, law, software development, data analytics or actuarial science.
More: Iowa, ISU and Northern Iowa are raising tuition this fall. What this means for students:
But he said risk management courses could better prepare students for life in the industry. Lewis said many of the 167 students majoring in risk management at the University of Iowa are also pursuing other majors.
“You get a much more engaged workforce,” Kevin Croft, director of the Kelley Center for Insurance Innovation at Drake University, said of the University of Iowa's program. “I don't think I'll have to train you that much.”
The birth, death and rebirth of the head of the University of Iowa
Risk management has a long history at the University of Iowa, led by Emmett Vaughn, an early pioneer in the field, who began teaching at the school in 1963. His textbooks were used around the world, and the United Nations used Vaughan to assess the value. Details of damage caused in Kuwait after the Gulf War.
Former Governor Terry Branstad credited Vaughn's teachings for giving the state some of the best regulators in the country, building Iowa's reputation as an insurance hub.
“He was an incredible teacher,” said his daughter, Terri Vaughn, a former Iowa insurance commissioner. “He took complex concepts; He made them simple. And he made them fun to learn. He had a lot of stories and a lot of examples that would embed a lot of concepts in your mind. “People loved going to his classes.”
But in 1983, the university eliminated the risk management major, moving Vaughn to the role of associate dean. Branstad said the state's universities are making deep cutbacks to save costs as budgets shrink during the farm crisis.
George Daly, dean of the business school at the time, told the Des Moines Register that he did not recall there being any insurance companies in Iowa. But she wasn't surprised to hear that he might have cut it off.
“You get these specialized majors, and then often they have enrollment problems,” he said. “And so streamlining the curriculum, as has been said, would be a quite reasonable objective.”
At Drake, Croft said the university also cut back on its risk management in the early 1990s because of “student interest issues.”
Des Moines insurance agency chief advocates revived program
Not everyone viewed the cuts the same way.
“It was a disgusting act,” said Dana Ramundt, a 1974 risk management graduate.
Ramundt, who founded The Dana Co., a Des Moines insurance agency, said Iowa has lagged behind other states in recruiting insurance talent because it has lost its risk management chief. He said he received nine job offers from the college, which he credited Vaughn as “an icon”.
Ramundt remained close to Vaughn after graduation and for years advocated for the university to bring back the major. Ultimately, in 2005, a year after Vaughan's death, the school launched the Vaughan Institute.
University administrators, however, declined to reopen the major, Ramundt said. He said other deans and professors may have objected to spending more money on new staff and classes. Instead, the program offered a certificate for students taking five courses.
But Ramundt said he and other officials continued to advocate for a chief. Amy Kristof-Brown, who became dean of the Tippett College of Business in 2020, advanced her request through the Board of Regents two years ago.
“It's one of the most rewarding experiences I've ever had, seeing this thing come to life again,” Ramundt said.
Drake, Iowa state making big increase in insurance offerings
Other schools across the state are also trying to improve the talent pipeline.
At Drake, Croft said the school hosts “Disruption Day,” when students listen to guest speakers talk about how they are trying to disrupt the insurance industry. Croft hopes the conversation will excite students who may view insurance as a stagnant industry.
Drake also hosts an “Innovation Lab” where executives from EMC Insurance Company, Principal Financial Group, and Holmes Murphy & Associates share problems they are trying to solve.
More: Drake University Business School named after former principal CEO and wife, who are among top donors
Holmes Murphy CEO Dan Keough said the company received feedback from students last summer about starting a general agent line of business and how a startup could reduce risk for car wash companies.
In Ames, Iowa State University added an actuarial science major in 2019. Professor Rahul Parsa, who joined the faculty from Drake, said Principal CEO Dan Houston and other Des Moines officials told him the state needed more actuaries.
He said local companies have struggled to bring in students, especially those who graduate from a school like Drake, where many students come from Chicago.
More: How John Pappajohn Entrepreneurial Centers started with a $1 million check 25 years ago
“Young kids, they want to go somewhere to have fun,” he said. “They don't think Des Moines is fun. it's useless. There is nothing to do here.”
He said many of the students at Iowa State come from rural parts of the state. They believe they are more likely to stay in the area after school.
About 35 students are majoring in actuarial science. Parsa hopes that this number will increase to 50.
“For them, Des Moines is big,” he said. “They're happy. That's why businesses love our program.”
All schools are participating in Insure Your Future, an internship program that IEDA launched last year. The program connects freshmen and second-year students with companies, giving them paid internships in the hopes that they will take an interest in the insurance field.
Terry Vaughn said the program is the brainchild of Michael Gold, the state's insurance economic development director. (IEDA did not return The Register's interview request.)
Lewis said about 70 students from schools across the state interned with about 25 companies last summer, which was Insure Your Future's first group.
The insurance industry's struggle with sex appeal
F&G CEO Christopher Blunt said he understands why more young students are not attracted to the industry.
“The thought of sexy industry doesn't cross anyone's mind,” he said.
When Blunt attended the Wharton School of the University of Pennsylvania he had no interest in insurance. He started as an asset manager.
He said the industry could reach more students if it marketed itself better. He said executives need to explain what impact they can have, whether the contracts they sell will pay for rebuilt homes after the storm or help families if a breadwinner dies unexpectedly.
He said many insurance leaders are “math geeks” who talk about the mechanics of their insurance contracts.
“We have to talk more about what we do, what the outcomes are, what the mission is,” he said.
In Iowa City, Lewis said he also believes the industry can achieve that goal. In particular, he believes that students need to know that they can earn a solid living without spending long hours in a highly competitive environment.
He said current finance majors are preparing for a “tough road ahead” on Wall Street.
“When they come out (of those jobs) a lot of them are faced with that reality,” he said. “'What have I done to myself?' It's a really tough existence.”
Tyler Jett is an investigative reporter for the Des Moines Register. reach it tjett@registermedia.com515-284-8215, or on Twitter @letsjet. He also accepts encrypted messages at tjett@proton.me.
