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The Complexities of Insurance for Schools

 

Schools, public and private, are not immune to problems. From playground accidents to political and legal challenges, schools are problem magnets. Thus, school insurance is vital to guard against potential risks. For limited budgets often faced by schools, the problem is rising insurance premiums.

 

This article reviews the cost of school insurance premiums, aiming to explain the economics behind the costs and provide a guide toward future premiums.


 

Calculating Insurance Premiums

The formula for determining insurance premiums is deceptively simple: a premium = “overall claims in a year” / “size of the insurance pool.”

 

This equation suggests a direct relationship between the frequency and magnitude of claims within a given year and the size of the collective pool of insured entities. A larger pool with fewer claims typically results in lower premiums for all. Conversely, a year marked by numerous or significant claims can drive premiums up, impacting even those who have not filed any claims themselves.




 

People Costs are Rising

Insurance and workman’s comp for school employees represents one of the largest changes in insurance costs. In Oklahoma, for instance, premiums for the state’s self-funded insurance program rose over 6%, mostly because of rising costs in health care costs.

 

"We've all been affected by these unprecedented inflationary times," said John Suter, executive director of the Office of Management and Enterprise Services, which manages Oklahoma’s insurance fund for teachers and other state employees.

 

The 900-student school district in Davis, southern Oklahoma, said that they are seeing record premium increases, partly due to the increasing costs of health care for employees. In 2019, for instance, the district paid about $68 per student for insurance coverage. In 2023, that rose to $290 per student.


 

Litigation is also an Issue Increasing Premiums

New laws affecting schools are also impacting insurance. In Ohio, the state passed legislation to allow teachers to carry concealed handguns, as long as the local school board approved the policy. Two school districts allowed concealed carry by teachers, triggering their insurance companies to stop coverage. The districts ended up rescinding the policy to regain coverage.

 

Other laws that covered transgender student access to restrooms, fraud, and textbook access have also impacted rates.

 

However, those changes have also impacted the insurance companies themselves. Two insurers in Oklahoma stopped providing coverage during the pandemic because of escalating claims, forcing many small districts to opt for more expensive coverage from Oklahoma’s state insurance program.


 

Climate Change is Playing a Role in Premium Prices

The recent uptick in overall claims can be attributed to natural disasters, including wildfires, floods, tornadoes, and hurricanes. These catastrophic events have led to unprecedented claims, stretching insurance company resources.

 

The Oklahoma School Insurance Group nearly doubled insurance payouts to $30 million in 2023 from just two years prior, mostly because of rising construction costs after building damage claims. This group is the last option for insurance for an increasing number of Oklahoma school districts. Insurance is less available on the open market when a district has buildings with serious maintenance needs.



School building under maintenance.
Reducing your building maintenance backlog can reduce premiums.

 

 

How School Districts are Responding to Rising Costs

While insurance premiums are rising, school districts are trying to slow costs by being more vigilant with maintenance. An insurance collective in Oklahoma, for example, is helping to fund school building sensors to monitor pipes during winter months. If a pipe burst is caught quickly, then total repair costs fall. This helps both the district and the insurance companies.


Other districts are investing in their maintenance backlog. By reducing repairs and upgrading buildings, districts face fewer building emergencies requiring insurance companies to be involved. However, this is possible only if a district's community helps fund those repairs.


There is a very large maintenance backlog in this country. An EdWeek survey found that 45% of school districts in the US felt they had significant building repairs that needed maintenance.


Funding for those repairs usually falls to voters to pass building maintenance levies. Unfortunately, this also isn’t happening in the US. Half of all local school bond levies fail locally, with schools forced to turn to insurance where possible or go without.


Private schools have options to reduce insurance premiums in the face of those challenges. Shopping insurance coverage between companies can pay off.

 

 

Conclusion

Rising insurance premiums for school districts mean tighter budgets and money pulled from education. However, schools can reduce insurance premiums by working with their insurance providers and state policymakers to find solutions.

 

By understanding the elements contributing to high insurance premiums, stakeholders can better prepare for the unforeseen, ensuring that educational institutions remain safe havens of learning, undeterred by financial challenges.

 

Does your school district need insurance advice or need to explore options? Loomis Insurance is available to help.


Contact Loomis Insurance for excellent rates and options to reduce school insurance premiums if you're in Oklahoma, Missouri, Kansas, or Arkansas. We’re here to help.




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