Inside the Cabinet Meeting
A Newsletter from Dr. Jim Largent - Issue 2 - February 2020
We are currently in a very volatile insurance climate and in the words of a leading brokerage firm, the property insurance market is in “a bit of turmoil.” With many significant weather events in recent years, insurance companies have seen large claims eroding their profits. Houston has had two “500 year-events” in just the last three years! Many insurance carriers are leaving the property market or otherwise restricting their exposure to potential losses, particularly in geographic areas more prone to weather events.
Lloyd’s of London, which significantly influences the insurance markets, has changed its payback model from 30 to 15 years. This is huge and effectively means that everything has doubled! Industry insiders say this market is even worse than what we experienced with 9/11 and Hurricane Katrina. Catastrophic losses have caused insurance companies to lose money in 6 of the last 9 years, which has translated into rates going up every month since October of 2017. As the property markets continue to harden, carriers will look for ways to increase their capital. This is insurance-speak for “Expect your rates to go way up!”
Forecasting weather is always unpredictable, but, there is something you can control--making sure your property is valued correctly! Many of you are insured based on property valuations that were done a decade ago, or maybe just an educated guess by you or your insurance agent. We are now seeing actual replacement costs of building easily exceeding $200 per sq. ft., some much more than that.
What is the cost of being underinsured? One school district submitted a $10 million claim against a building that was valued at $4 million. Insurance companies depend on accurate information to provide financial stability and long-term success for their customers and stockholders. A school that is undervalued may have short-term budget relief but the shortfall in the case of a catastrophic event could cause long-term financial and political problems.
Determining the value of your district’s property may take some time and effort, but finding out whether you are properly insured before you experience a loss is one of the smartest things you can do. The property insurance market is in a state of correction. You should expect increased premiums and higher deductibles associated with your coverage next year. Some of your current carriers may send you a notice that they will no longer cover your school, and others will force you to combine coverages if you want them to continue to do business with you.
Insurance is an area where many school leaders should take a closer look at their values, their deductibles, their coverage, and make sure that they are truly protected. The worst-case scenario is to have a catastrophic event and find that you only have a fraction of the coverage necessary to replace your facility. Unfortunately, we have seen this play out in several school districts in recent years.
Creative Risk Funding has long been established as one of the most transparent and successful worker’s comp companies in Texas. They are taking their SchoolComp model and introducing it to the property insurance market.
The Creative Risk Funding model is a self-insurance pool, where schools share an initial layer of risk but are protected from catastrophic claims. Using a component called SchoolGap Protect built into the program, schools will ensure they are protected from catastrophic losses and the risk they likely have with their current provider. All dollars are transparent within the pool and you retain all your money locally as with the SchoolComp model. When the program rolls out this summer, rates are expected to be very competitive, and the use of the SchoolGap Protect component within the plan should make this a very attractive product for schools. Creative Risk Funding will not force any district to select one of their products over another. In fact, a member district must first qualify for their program and be fiscally sound.
If you would like more information, send a current Schedule of Values, 5 Years of Loss History and your current Contributions and Coverages Summary statement to email@example.com. Or, click on the link below to leave your information and someone will contact you. If you would like a quote on SchoolComp coverage while you are at it, just let us know.
(credit to Phillip Cummings for much of the data in this article)
Early voting begins on February 18th and election day is March 3rd. I have a challenge for each of you and it is very simple and very focused. Make sure that everyone in your realm of influence votes!
If you are a teacher, make sure all your grade level colleagues vote. If you are a principal, make sure your campus staff votes, if you are a department leader, make sure your entire department votes, and if you are a superintendent or board member, make sure all the staff in your district knows how important it is to vote and how this is expected in your district.
I see far too many of my colleagues who are too timid, don’t want to get “involved” in politics, or just don’t want to face any scrutiny for encouraging people to vote. It is time to be a bold leader on this subject! Elections are won in the primaries, and it is imperative that educators vote for pro-education candidates. We have talked before about how to easily find out who is a pro-education candidate and who is not! If you don’t know, just ask. There are several organizations out there who focus solely on this issue.
If educators will vote for pro-education candidates, we could literally control politics in Texas. Think about how important that statement is, and make sure you are doing your part to make it happen! We have over two million students in Texas who are counting on us to take care of them!
Be realistic when looking to further your career. If you are a high school principal at a 3A high school, you are likely not going to be considered for a superintendent’s position at a 5A district. A more realistic career path would be to look for a small school superintendency or a move into a central office position in a same-size or larger district as the one in which you are currently employed.
When you apply for a new position, make sure you are meticulous with the documents you submit. A professional resume is a must. Have someone proofread your documents for spelling, punctuation, etc. to make sure you are presenting yourself in the best possible way.
Recommendations from people who are well-respected in the field is a big help, and having them contact those doing searches is also a good way to get your foot in the door. Once granted an interview, it is up to you to get the job!
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