Key Challenges Facing School Districts
Schools are facing three main challenges in today’s property insurance market:
- Higher Deductibles. While increased deductibles help carriers manage their own exposure, they shift more financial burden onto schools when losses occur.
- Rising Premiums. Premium hikes are common to all industries, but they hit school budgets particularly hard. Unlike for-profit entities, school districts operate under strict financial constraints, making these increases especially painful.
- Coverage Limitations. Flood coverage has become particularly difficult to secure. Carriers are restricting limits based on location and, in some cases, excluding properties altogether using risk scoring models. Unfortunately, these models do not always reflect the true risk of a specific school building, leaving districts with fewer options for protection.
Why is the Market Tightening?
- Unpredictable weather patterns. Catastrophic storms, floods and wildfires have surged, prompting reinsurers (who insure the insurers) to raise their rates and the carriers are passing those costs along to schools.
- Spike in water damage claims. There has been an uptick in both the frequency and severity of water damage claims across the country, making schools a more challenging risk to underwrite.
- Reduced Reinsurer Capacity in High-Risk Areas. Reinsurers are pulling out of regions with elevated exposure, limiting the availability of coverage in those areas.
How Schools Can Respond Strategically
Despite the challenges, districts can take meaningful steps to protect their assets and budgets.
- Present your risk clearly. Provide detailed, accurate informationto insurers to help them assess your risk fairly.
- Invest in risk management. Implement preventative measures such as maintenance protocols, safety policies and emergency preparedness measures that reduce the likelihood of claims and demonstrate responsibility.
- Foster strong partnerships. Build collaborative relationships with brokers, advisors and carriers to navigate the market more effectively.
- Prepare to absorb more risk. Consider adjusting your risk tolerance and budgeting for higher deductibles or self-insured retention.
- Explore alternative funding solutions. Develop contingency plans or pooled resources to offset potential losses and maintain coverage continuity.
The property insurance market, particularly for schools, is in flux and most likely won’t return to previous states. That is why it is essential for districts to understand their own unique risk and take proactive steps to position themselves better for long-term resilience. EHD’s Schools Practice Group and Risk Control Team are ready to help – offering tailored so districts can focus on what matters most – protecting their students, staff, and facilities while also managing costs effectively.
