The school board voted unanimously to approve the purchase of property and casualty insurance for the 2022-2023 school year, but not without trepidation. The new premiums are $400,000 more than they were last year. And board members expressed a bit of frustration that they were given the quotes too late to absorb the information before their current insurance coverage lapsed and they had to vote on it.
Ilene Abella is a property and casualty broker for Arthur J. Gallagher Risk Management Services, the school district’s insurance brokerage. The firm is in year three of a three-year contract with the district. She presented the quotes received from different carriers and explained the reason for the $400,000 increase in premiums.
Gallagher approached 43 insurance carriers for quotes for the school district, and 23 submitted proposals. The package that the firm presented was the least expensive and has different layers of coverage from different companies, including coverages for property, cybersecurity and equipment breakdown, among others.
Abella explained the biggest reason for the almost half-million-dollar skyrocket: coverage for property and cybersecurity has gone way up in the past year.
“The property market has been our biggest challenge,” Abella explained. “Between wildfires and major freeze events, there have been lots of major catastrophes, the most billion-dollar-plus weather and climate disasters in U.S. history — 22 events in 2020 and 20 events in 2021.”
And, she said, carriers see the Florida Keys as a risky place to cover. “The Florida Keys is still viewed as one of the most vulnerable areas in the country,” she noted.
One line of coverage went up a staggering 83 percent: cybersecurity. Cyber claim frequency and severity has been spiraling upward, which led to cyber insurance carriers increasing their premiums.
But Abella complimented the school IT department’s competent handling of preventing cyber attacks.
“The deductible you have for cyber is one of the best renewals in the sector in Florida due to your IT department,” she said.
Still, the total cost for the renewal of the insurance package is close to $1.5 million. And board members balked a bit at getting this quote too late to search for a cheaper alternative in time for the next school year.
“On behalf of taxpayers, we need to look at spending money and not just having insurance to have insurance,” said board member Mindy Conn, suggesting that the board discuss which types of coverage to drop.
“After renewal is the time to go over these types of issues,” responded broker Abella. She noted that the insurance carriers would only hold the quotes for 45 days.
“We have an obligation, so we can’t just stop this,” said board chair John Dick, referring to the Gallagher brokerage firm’s three-year contract.
In the end, the board members voted unanimously to approve the purchase of the property and casualty insurance that the firm proposed — with the caveat that they will start conversations immediately to prevent the same type of price increase next year.
“We are trying to be the best possible stewards of taxpayers’ money, and in order to do so, we need this information earlier moving forward,” Conn told Keys Weekly. She explained that though the firm does excellent work, the frustration is due to the quotes being received at the same time that the board has to vote before the insurance lapses.
“The information requires more than a week (to go through),” Conn said.
