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Meet OP: Fiat Lux Risk and Insurance

Courtney Claflin, Karen Hsi, Sylvia Bhatia and Alfred White


There’s a little-known company that’s drastically reducing UC’s overall cost of insurance. And its exponential growth in the last two years has catapulted it into the top echelons of the finance world.

We’re talking about UC’s own captive insurance company, Fiat Lux Risk and Insurance. Established in 2012 under the department of Risk Services, which is led by Associate Vice President and Chief Risk Officer Cheryl Lloyd, Fiat Lux now ranks as one of the largest captives in the U.S. In 2017, it was named Captive Insurance Company of the Year.

If you’re surprised to hear that UC has an insurance company, you’re probably not alone. Most of us are familiar with other aspects of Risk Services – such as environmental health and safety, ergonomics and injury prevention, and emergency management – all of which play a critical role in maintaining the safety of our personnel while reducing the university’s risk of loss. So what exactly is a captive insurance company and why does UC have one?

Captives are licensed and regulated companies that issue policies, collect premiums and pay claims just like any other commercial insurance company. But instead of issuing policies to the general public, a captive only issues them to the business/organization that created the captive. Setting up your own captive means you can tailor it to meet your needs and significantly reduce your costs.

“We are now buying (re)insurance protection on a wholesale basis as opposed to buying insurance on a retail basis,” said UC’s Executive Director of Captive Programs, Courtney Claflin. “We get better coverage and terms at a lower price, and we get to capture underwriting profits and investment income that were previously retained by our traditional insurance companies.”

The benefits to UC of this approach are compelling: Significant annual savings (vs. paying premiums to an outside insurance company) plus revenue (from investment income) that can be redirected into the university’s mission of education, research and public service.

Currently UC has two captives: Fiat Lux provides 28 different lines of coverage for UC; and UC Health RRG, which provides medical professional liability insurance to physicians affiliated with our five medical centers. But with three more captives in the planning stage, UC looks to increase its risk-related savings and revenue in the coming years.

Awarded “Captive Insurance Professional of the Year” by Captive Review magazine in 2016, Claflin was also recently been appointed to a six-year term on the board of directors for Captive Insurance Companies Association. That puts UC right in the middle of the nation’s captive insurance discussions. This is significant given that captives currently cover about one-third of the world’s insurance premiums and are used by most large university systems in the U.S. as well as most Fortune 1000 companies.

In addition, Captive Program Manager Karen Hsi was just named one of the eight “people to watch” worldwide in 2018 in the captive industry. Along with helping manage Fiat Lux’s 30 risk financing arrangements, Hsi is the principal architect of three pending captive arrangements that will provide significant financial benefits to the university.

“We (Fiat Lux) don’t create the risk and we don’t manage the risk, we simply try to finance that same risk more efficiently within our captive insurance platform, with the intent to return all the savings back to the UC system to support its mission,” Claflin concluded.

With a staff of just four employees – Claflin, Hsi, Finance Director Sylvia Bhatia and Program Analyst Alfred White – this tiny department at UCOP is making a large and growing contribution to that mission.

Reporting for this profile was provided by Carol Lake and Cindy Lau. The “Meet OP” series of department profiles was created in response to your requests. See all previous articles in this series.  

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