School districts in Alberta are concerned about the meteoric surge in insurance rates this year, and an expert believes several factors are driving the steep increases.
The Wolf Creek Public Schools district in central Alberta was shocked to discover that its insurance costs will jump from $578,000 to $1.6 million – more than double the original amount.
“When we had budgeted for the school year, we didn't anticipate that kind of an increase,” superintendent Jayson Lovell told CBC News in an interview.
Similarly, Parkland School Division in Stony Plain revealed that it will have to pay $1.3 million in insurance fees. The district’s board is reviewing other insurance alternatives to avoid the high cost.
Even school districts that are part of a group to get better insurance rates are noticeably affected. Edmonton Public Schools, which is a member of the Urban School Insurance Consortium, is facing a 35% increase in its insurance costs to $6.1 million.
“This increase in insurance rates is not ideal; however, given recent market conditions, this was the best rate we could attain,” said Edmonton Public Schools CFO Todd Burnstad.
Another member of the Urban School Insurance Consortium, Fort McMurray Public School Division, said that it is facing an increase of about 40% to 50%.
Navacord executive chairman Marshall Sadd explained to CBC News that the reason for these sharp increases in school insurance costs is due to several factors – namely, more demand despite fewer companies in the market and environmental disaster, such as forest fires and floods, have driven up rates.
The disasters have also uncovered risks that schools have not prepared for, such as costly wildfire smoke damage to school buildings.
“When the smoke occurs at these properties, there's an expectation for health reasons that they are cleaned extremely well,” Sadd said. “That's just a big, big expense that probably wasn't considered a number of years ago.”
Although the situation looks grim, Sadd projects that insurance prices will settle sometime during the latter part of 2020.
“This is a cycle,” he remarked. “We'll start to see competition come back and rates ease off a bit.”
