COLLEGE STARTS INSURANCE AGENCY TO FUND SCHOLARSHIPS
Roger Williams University in Bristol, RI has just established an insurance agency to generate profits which will fund student scholarships.
"To our knowledge, no other college or university in the country has launched such a venture," says Anthony J. Santoro, president of the university.
The insurance agency, called AEICO, is wholly owned by Roger Williams University. It is a free-standing, full-service agency licensed by the State of Rhode Island. AEICO offers property, life, casualty and health insurance as well as retirement programs. It represents companies such as Chubb Insurance Group, General Accident Insurance and Employers Mutual. One-hundred percent of AEICO's profits will be channeled into funds designated for student scholarships.
RWU officials are cautious about forecasting how much scholarship money the agency will generate.
"Since this is a new venture, we have no historical data on which to base estimates, so we cannot provide precise forecasts," says Ralph. R. Papitto, chairman of RWU's board of trustees. "We do expect that, within three years, AEICO will generate at least $500,000 to the scholarship fund annually."
RWU, a private university with approximately 3,000 undergraduates and a 450-student law school, decided on this unusual mechanism to generate scholarship support for several reasons.
"First, by selling the university its own insurance policies, the agency begins with a sales volume that provides a high likelihood of success," says President Santoro. "Also, if AEICO is as successful as we believe it will be, the agency will provide an on-going income stream. Earning $100,000 in profits from the scholarship fund every year equates to providing a $1.2 million scholarship endowment which would yield an annual interest income of $100,000."
An additional benefit is that AEICO will provide opportunities for internships in RWU's Gabelli School of Business.
The insurance agency will be located in Providence, RI. It will have two full-time employees. James Horton is president. Most recently he ran Horton Financial Group, which sold investment and insurance products. He has 10 years of experience in financial services and insurance. Linda M. McCoy, CPCU, is account executive. She was vice president of a Rhode Island insurance agency and has more than 20 years of insurance agency experience.
AEICO is a for-profit enterprise, subject to all taxes and regulations imposed on other insurance agencies. Thus, it does not compromise the university's tax-exempt status.
"AEICO has no cost or tax advantages by virtue of its being owned by the university," says President Santoro. "It can succeed in the same ways that its competitors succeed, by using entrepreneurial zeal and client service and by representing top-notch insurers."
RWU officials point out that AEICO is not a form of self-insurance.
"Not at all," President Santoro says. "In self-insurance, an organization assumes risk on itself rather than insurance against it. Roger Williams University continues to purchase insurance policies from some of the best insurance companies in the country, but through an agency it owns rather than through an independent agency."
In addition to buying its own insurance through its own insurance agency, RWU anticipates that revenue also will be generated by individuals and businesses who purchase insurance. "In this way, they can help fund scholarships at no incremental cost to themselves," President Santoro says. RWU employees will be able to purchase insurance from the agency via payroll deduction.
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Editors and Reporters: You may call President Santoro at 401-254-3201 for more information about this highly unusual scholarship program. Also feel free to contact James Horton, AEICO's president, at 401-276-4818. If you need any additional assistance, please contact Dick Jones or Steve Infanti of Dick Jones Communications at 814-867-1963. DJC helps Roger Williams University with some of its public affairs work.
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