Table 1.-LOSS RATIOS1 (CERTAIN CITY SCHOOL SYSTEMS IN STATES) 1 The Association of Public School Business Officials. Insurance Committee Report on School Fire Insurance, 1938-45. Bulletin No. 11, 1948. p. 38-39. 2 Are not statewide. Cover only certain cities in these States. In most areas of coverage, school insurance costs, losses, and loss ratios are not sufficiently segregated to permit identifying them as such. This study seems to be the first attempt to develop specific information about school insurance experiences on a State-by-State basis. Since national and State data were not available on all types of school property insurance, this study is limited to the areas for which state wide data were available. It includes experience data as reported by 41 or 42 States where the schools purchase commercial insurance; and for these States it is limited to school fire insurance premium costs, losses 14, and loss ratios.1 As will be explained later, the data on the five States which have State-operated insurance programs are not limited to school fire insurance costs or losses. It should be understood that even the school fire cost and loss data are not complete since some school districts carry self-insurance, which is not reported on a national basis, and some districts which assume their own risks without reserve funds are not included in these reports. This is planned to be a factual and historical study of existing programs. The study is divided into three major parts. The first provides background. The second deals with fire insurance loss experiences and covers premium costs, losses, and loss ratios by State. The third provides some historical, and a current status, analysis of each of the five State-operated school insurance programs. Since the State operated programs described do not have identical coverages, the data from this section are not easily compared with those in the second section. 14 As used in this study the term losses refers to the amounts of the indemnities paid by the insurers to the owners; the term loss ratios refers to the relationship (stated as percentages) of the loss (indemnities) to the premiums received. Section II ။ STATE EXPERIENCES IN SCHOOL FIRE INSURANCE D ATA ON SCHOOL PROPERTY INSURANCE formerly were reported as a part of a classification that included other types of buildings. Consequently the school experience data were not easily segregated or identified in State or national reports. School officials desired a classification pattern that would provide separate data for schools. They also wanted separate information on public elementary and secondary schools. DATA ASSEMBLED BY NATIONAL ORGANIZATIONS Complete separation has not been obtained. However, the Standard Classification adopted in 1947 establishes one classification as "Educational Institutions (Public and Private) Including Libraries, Museums, and Auxiliary Buildings on Premises." This classification applies for fire insurance. Under this pattern, stock insurance companies report school fire insurance premium incomes and losses by States to the National Board of Fire Underwriters, and nonstock companies (including mutuals and independents) report to the Mutual Insurance Advisory Association. The two agencies assemble these data from all companies by States and compute the totals and loss ratios for each State. They then report the State totals to the various State insurance departments which had previously designated these agencies as the official statistical agencies for tabulating and reporting such data. It is generally understood that a single year of experience does not provide ample evidence of the validity of the rate structure. It should also be understood that a 5-year period, while not an accurate measure of the equity of rating, does provide some basis for evaluating the underwriting experience results. Hence, this Office waited until data were available for 5 consecutive years of experience, 1948-52 inclusive, on the classification which sets educational buildings apart as a separate class. These data are reported to the State insurance departments annually, and in 1953 cumulative data on educational buildings for the 5 years, 1948-52 inclusive, were made available for the State insurance departments. Data for later years were also available in the State insurance departments in 1954 and 1955, but for this Office of Education study it seemed desirable to get experience history for the same 5-year period for all of the States if possible. Consequently, early in 1954 the Office began to assemble data on State-wide experiences on fire insurance premium costs, losses, and loss ratios by States, for both the stock company and the mutual and independent group, for schools during the years 1948–52 inclusive. Under the 1947 Standard Classification plan the educational buildings class (generally designated by a code number) is divided into three groups according to type of construction. These are fire-resistive, which probably is self-explanatory; ordinary or brick, which may have masonry walls but some combustible interior construction; and frame construction, which also is probably self-explanatory. Each of these groups is reported separately for protected or nonprotected areas-indicating whether or not the buildings are located in areas having approved fire protection. On this basis the reports sent back to the State insurance departments covered six different groups of school buildings. DATA MADE AVAILABLE AT STATE LEVEL These educational building fire insurance experience data in the State insurance departments were, as public information, made available on request to representatives of the State departments of education. In some cases the State department of education representatives explained their interest in these data and the use they expected to make of them. In a few cases the cost-loss information was available also for the year 1953. Generally, however, the States adhered to the pattern suggested by the Office of Education, and reported composite summaries of the school fire underwriting experience results for only the 5-year period, 1948-52 inclusive. Some State department of education officials copied the data from the insurance department records. In one State the data were obtained by telephone from the rating bureau officials, upon recommendation from the State insurance office, and were later confirmed by correspondence. In most cases the State insurance department officials reported the data to the State department of education representative (usually the director of the school plant service unit in the State department of education). A few State insurance department officials sent the information directly to the Office of Education at the request of the local State department of education. All of the data in the following tables were taken from the reports sent in from the States except (as will be shown in one table) certain mutual and independent insurance company information, which did not seem to be available in the State offices. (Consequently a breakdown into the six classes was omitted from the State reports.) However, the totals of such experiences for mutual and independent companies were obtained directly from the Mutual Insurance Advisory Association and are included in a separate totals table. Because of such inclusion this one table of totals will show slightly more coverage and losses than are shown in the summaries of the previous tables. Five States have State operated property insurance programs and these will be covered in a later section. Two of these States-Wisconsin and North Carolina-have both optional State operated pro- 1 gram coverage for some schools and commercial coverage for others and they reported each. North Carolina did not report the commercial insurance breakdown by types of buildings but did provide totals for each class. Three State education departments (Delaware, Montana, and New Hampshire) were not able to locate the desired data in their States. Hence the tables show stock and mutual or independent coverage experiences for all of the schools in 40 States and data for partial coverage by commercial insurance in two States, North Carolina and Wisconsin. Later tables will show the experiences of the five Stateoperated programs including those in North Carolina and Wisconsin. Information was not available to show whether the mutual experience data included local or county mutuals. However, the amount of school coverage written by such local mutuals probably is small. SCHOOL FIRE INSURANCE COST AND LOSS EXPERIENCE: 1948-52 The following tabulations provide summaries of the State reported educational building (public and private at all levels) fire insurance costs and losses paid for the 5-year period 1948-52. The experience data for each of the three classes of buildings-fire resistive, ordinary or brick, and frame-are reported separately for protected and unprotected areas. These are reported as factual data and no attempt is made to evaluate the overall cost and loss relationships. Table 2 shows the costs, losses, and loss ratios for fire-resistive buildings in protected areas for the States reporting. Table 2 shows a wide range in loss ratios for fire-resistive school buildings in protected areas. This wide range in loss ratio percentages is in some cases explainable because of small coverage and premium incomes for this type of risk. The loss ratio shown for Mississippi in mutuals and again in the totals might have been caused by one or two fires each. The same might be true in the case of the Colorado totals. This illustrates the need for information on numbers of cases in order 1 |