Contents Page Some Other Studies in This Field. Development and Scope of This Study... Section II. State Experiences in School Fire Insurance. Data Assembled by National Organizations.. Section III. State Experiences in State Operated School Insurance The Alabama State Insurance Fund Including State School Building 1. Loss ratios (certain city school systems in States) __ 2. Fire insurance costs, losses, and loss ratios on fire-resistive buildings in 3. Fire insurance costs, losses, and loss ratios on fire-resistive buildings in 9. Comparison of fire insurance costs, losses, and loss ratios, on all buildings for all types of construction, in protected and unprotected 10. Summary of State reported fire insurance costs, losses, and loss 11. Summary of fire insurance costs, losses, and loss ratios, for all buildings 12. Comparison of the reports of the Mutual Insurance Advisory Associa- Section I INTRODUCTION CHOOL INSURANCE has developed into a major administrative SCHO problem for many local school officials. A few decades ago insuring companies did not show any great interest in school insurance, and local school officials limited their programs to some fire and/or wind-protection coverage purchased through a local agent. Today under aggressive salesmanship and with certain newer ideas concerning school district obligations, some school boards purchase 20 or 25 different types of insurance coverage. These types of protection include such features as windstorm or extended coverage, workmen's compensation, burglary, liability or accident, and special types of coverage on certain movable objects. These increased coverages have been accompanied by substantial increases in costs. School officials have not adopted a common pattern of school insurance coverage. Some school districts write no coverage on school property but provide a type of self-insurance by building up reserves for replacement. Certain other school districts assume the risks without building up replacement reserves. Most school districts purchase various types of insurance coverage. Some of them write partial or minimum coverages, expecting to assume a part of the risk. Others write extensive or even full coverage on many or most items of risk. However, a majority of the school districts probably attempt to develop and maintain a selective type of coverage on the various risks included in their insurance programs. SOME OTHER STUDIES IN THIS FIELD Several studies have been made on segments of the total school insurance program. Keith and Taggart 1 made a study of the insurance programs for the years 1922-27 on about 2,400 school buildings in Pennsylvania. During the 5-year period premiums were reported to be about $1,000,000 with losses of about $220,000. Keith and Taggart also showed that for this period loss ratios were higher on certain types of 1 Keith, J. A. H. and Taggart, M. H. A Study of the Economical Insurance of School 12 pp. Property in Pennsylvania. Harrisburg, Pa., Commonwealth of Pennsylvania, 1919. buildings. Holy 2 made a study of the premiums paid, fire losses, and loss ratios for certain Ohio schools for the years 1930-32 inclusive. His report showed a loss ratio of about 7 percent for the buildings covered during these 3 years. Melchior 3 made in 1925 a study of the insurance rates on 1,278 New York State buildings, and Smith made in 1930 case studies of the insurance costs for about 200 buildings in New Jersey, and Viles 5 issued in 1934 a detailed analysis of the make-up of school building insurance rates, and in 1941 outlined procedures for establishing a local program. A later study by Finchum' outlined suggested procedures for insurance programs in Tennessee, and Smith, Research Associate of the Bureau of Governmental Research and Services, University of Washington, outlined in 1951 a study of fire insurance coverage for Washington school districts. 6 In a series of committee studies the Association of Public School Business Officials summarized fire insurance experience results in selected city school systems in the United States and Canada. On page 49 on the 1932 report the committee made a statement to the effect that, at that time, fire loss payments for all coverages for stock insurance companies were about one-half of the premium dollars received. The committee was not attempting to evaluate this ratio but used it as a basis of comparison in reporting the fire-loss ratios for city school building insurance. This committee reported a total school fire-loss ratio of 28.7 percent for the 10-year period, 1921–30, for the cities reporting. The 1941 committee report 10 covered schools in 257 cities for a 7-year period, 1931 through 1937, and showed a fireloss ratio for these cities of 26.9 percent. In support of their contention that city school fire insurance rates were too high, this committee cited National Board of Fire Underwriters' data " showing for the years 1932-38 inclusive a fire-loss ratio of 40.6 percent for all types of 11 Holy, T. C. Information on School Plant Insurance in Ohio. Columbus, Ohio, Bureau of Educational Research, 1933. Mimeograph. Melchior, W. T. Insuring Public School Property. Contribution to Education No. 168. New York, Teachers College, Columbia University, 1925. 187 pp. 113 pp. Smith, H. A. Economy in Public School Fire Insurance. Contribution to Education No. 428. New York, Teachers College, Columbia University, 1930. Viles, N. E. Improving the Insurance Program in the Local School Districts. bia, Mo., University of Missouri, 1934. Thesis. Colum Viles, N. E. School Plant Insurance. Nashville, Tenn., Interstate School Building Service, Peabody College, 1941. 15 pp. 7 Finchum, Ralph N. Planning the School Insurance Program in Tennessee. ville, Tenn., University of Tennessee, 1953. Thesis. Knox Smith, George D. Fire Insurance Coverage for Washington School Districts. Seattle, Wash., University of Washington, 1951. Report No. 114. National Association of Public Experience of City School Districts. School Business Officials. Bulletin No. 2, 1932. Insurance Practices and 10 National Association of Public School Business Officials. An Investigation of Insurance Practices. Bulletin No. 9, 1941. 11 Op. cit., p. 54. (Note-Name later changed to Association of School Business Officials of the United States and Canada.) educational institutions. An association committee report of 1948 12 summarized the loss-ratio experience for certain cities for the three periods by States. The summaries are shown in table 1. The data in table 1 were reported by the association committee. They seem to be limited to fire-loss ratios reported by local city school officials for cities of various sizes in the United States and Canada. The 1921-30 period report provides data on about 9,200 school buildings in 380 cities in 32 States-buildings on which premium costs were about $14 million. The 1931-37 period report covered about the same number of buildings in 257 cities on which about $6.7 million premiums were paid. Data were not available to show the coverage included in the 1938-45 period report. A recent bulletin on school insurance administration was issued in 1953 by the American Association of School Administrators.13 School insurance is also the basis for a number of current studies. A doctor's thesis by John C. Curry in Indiana relates to Indiana school building insurance losses. Some other studies recently outlined include one by G. R. Robinson, Superintendent of Schools, Hazel Park, Michigan; another by A. N. Abercrombie of Pineville, Kentucky; and a third by Lynn W. Hansen of Blackfoot, Idaho. DEVELOPMENT AND SCOPE OF THIS STUDY For years State and local school officials have raised frequent questions concerning school insurance programs. These questions relate to many areas in property, casualty, compensation, fidelity, burglary, and other types of insurance protection. Some of the specific questions have related to such administrative problems as the amount of coverage to carry, the distribution of policy business, maturity schedules, coinsurance contracts, and self-insurance. However, the basic insurance problems faced by school administrators and the ones eliciting most inquiries are related to school insurance costs. School officials ask about the make-up of insurance rates, the relationship of rates and costs to losses, the reasonableness of rates when compared with those for other insurers, and means of reducing rates. The studies previously listed applied to various phases of the total insurance program. Some provided data on rate making for specific types of coverage, some to loss experiences in limited areas and for specific types of coverage. There has been, and still seems to be, a lack of information concerning total and/or relative costs of the total school insurance program on a State or national basis. 12 National Association of Public School Business Officials. Insurance Committee Report on School Fire Insurance, 1938-45. Bulletin No. 11, 1948. 13 American Association of School Administrators. Managing the School District Insurance Program. Washington, D. C., the Association, 1953. 24 pp. 385054 0-56 -2 |