In-School Retention

Major developments in Sexual Molestation & Abuse coverage are also shaping this segment.

BACK-TO-SCHOOL SHOPPING

As a result of the tough fiscal environment and lower tax receipts, "schools, like other businesses, are cutting back on expenses," says Kendra Bostick, schools leader for program administrator ThomCo, which was acquired this year by Markel.

One manifestation of this clamping down on costs: Many schools are relying more on internal loss-control measures and less on purchasing insurance coverage, says Steven E. Sims, president of specialty-carrier WRM America in Uniondale, N.Y.

Another upshot is schools "are shopping their insurance coverage, looking for premium reductions," Bostick notes.

In New York State, for example, the slowly recovering economy and last year's 2-percent property tax-cap (which establishes a limit on the annual growth of taxes levied by local governments and school districts) are having a "tremendous" impact on public schools, says Shelley Levine, executive vice president for Bollinger Insurance's School Insurance Group.

"Schools are trying to reduce costs wherever they can," adds Levine, who notes that she has seen this year more Requests for Proposals—formal bids by a district to secure a different provider—than in any of her 28 years of writing insurance.

But while schools are on the lookout for deals, they are hard to find.

Historically, Sims says, carriers have given schools a lot of coverage for little premium—but no longer. The schools market is hardening both in capacity and pricing in various pockets around the country.

"So many [carriers] were throwing in coverages for little or no money," Sims says. "Now you're starting to see restrictions here and there."

Just a few years ago, schools were seen as a very desirable class of business by carriers, and "they were very, very competitive" for business, adds Mike Pehrson, practice leader for schools at R.J. Ahmann in Eden Prairie, Minn.

Today, Pehrson says, carriers are more cautious about both the inherent exposures in schools and the emerging ones, such as bullying, cyber risks and environmental. "That has driven some of the hardening of the market and some of the price increases," Pehrson explains.

NEW ENVIRONMENT

While schools may not be the first business class that springs to mind when discussing Environmental cover, it is a need for many—and one that many districts lack.

Bollinger's Levine cites two recent high-profile Environmental claims as examples.

In Manchester, N.J., mold in one school's carpeting will cost the town's school system more than $1 million to remove.

And in Briarcliff Manor, N.Y., an unused field contaminated with lead and mercury could cost the district $1.5 million to cap or $18 million to remove the contaminants.

"We are seeing that there are many more Environmental claims coming down the pike—but many schools are not purchasing Environmental Impairment Liability," says Levine. "We are seeing claims happening that are not protected."

While Levine urges her school clients to expand their Environmental coverage during her reviews, "no one is buying new coverage in this economy," she says.

WRM, for its part, is seeing schools doing the bare minimum to insure against environmental exposures. Some, says Sims, are "looking only at [oil] storage-tank exposures and finding the money [just] to buy that."

CYBER & SCHOOLS

In the corporate world, Cyber Liability is one of the hot insurance topics—and it's becoming a subject that schools, too, are paying more attention to.

Schools are seeing more data-breach exposures and, consequently, have become more interested in Cyber insurance to protect both students' and parents' data, says R.J. Ahmann's Pehrson.

 "Schools have a lot of proprietary data in their systems, so they have the risk of information being pirated and falling into the wrong hands," he says.

Many of Levine's clients have purchased Cyber cover, she notes, because Bollinger was able to add it on their school leaders E&O policy as an extension.

Many of WRM's school clients, while aware of the risk, are not buying Cyber cover because they need to keep costs down and, wisely or not, they assume that risk on their own.

"They've gone through the application process and [discovered] they've [already] got good risk-management protocols, so they've decided not to purchase," observes Sims.

PENN STATE INSPIRES HIGHER RATE

Sexual Molestation/Abuse insurance remains one of the top concerns of schools, both public and private. Pehrson says Abuse cover is one of the buzz-phrases that he hears a lot in the field and is the "top critical issue" among many of his clients.

Such coverage is also much on the minds of WRM's clients because of the national attention—and intense negative publicity—generated by the Penn State scandal, Sims adds.

Carriers, he notes, that have been losing money in this area are now looking to charge more for coverage.

"A lot of [carriers] are running a fever in this line, so they have got to get more rate," says Sims. "They're finding that the current rates have been slightly inadequate."

Rates are also "skyrocketing," says Bollinger's Levine, in Student Accident Cover (SAC) insurance—excess medical cover for when students get hurt on campus.

This is driven at least in part by the economy, as struggling or unemployed parents are more apt to bring a claim against a school to cover the costs of treating a child's injury.

While private schools usually have excellent accident insurance for students, public schools are struggling.

"It's a vicious cycle: Your rates go up on Student Accident in a year when you can't afford it," says Levine. "Communities are putting tremendous pressure on institutions to keep the tax rates down."

STATES' BULLYING POLICIES YIELD BROKER OPPORTUNITY

Another factor shaping the schools market is anti-bullying legislation.

Schools that receive any public funding, including some charter and private schools, must comply with new state anti-bullying laws enacted nationwide, says Shirl Hedges, underwriting manager for schools at Philadelphia Insurance Cos.

As a result of the new state statutes, in some states, schools could actually be held liable for cases of bullying.  

Right now 49 states have laws requiring schools that receive any public funding to have a policy in place against physical bullying, she says. (Montana is the only state without such laws.) Fourteen states have laws against cyber bullying, and seven of those states include events that take place off-campus.

The new laws have schools taking a very close look at their policies.

In fact, anti-bullying coverage for publicly funded schools is an area in which agents and brokers can look for new business because it's an emerging coverage need that will continue to grow, says Hedges.

In Minnesota, for example, Pehrson says there's currently much discussion among public and private schools with insurance or risk-management professionals about a proposed anti-bullying statute that would hold any publicly funded school liable for bullying incidents. "Awareness levels," he adds, "are high."