Arkansas schools will have part of the the cost of their rising insurance premiums covered by the state, Gov. Sarah Huckabee Sanders announced Tuesday.
The rising cost for property insurance is a result of nationwide storms that have damaged school facilities and have substantially increased premiums. On average, Arkansas schools have seen their premiums shoot up by 130%, according to a news release from the governor’s office.
Sanders said the state will cover 30% of the cost of the premiums for school’s property insurance, which will cost the state about $11 million from its restrictive reserve account, according to Alexa Henning, a spokeswoman for the governor.
State Rep. Brian Evans, chairman of the House Education Committee, said lawmakers have been meeting with the Republican governor for the past few weeks to agree on a plan to help cover some of the costs associated with the sharp rise in premiums. The move will need approval from the Arkansas Legislative Council, which is set to meet next week.
Education officials said an increase in severe weather, both in Arkansas and nationally, is the reason that insurance companies have raised premiums. Most schools are covered by an insurance plan through the nonprofit Arkansas School Boards Association, which purchases coverage on behalf of districts through Lloyd’s of London, a large insurance market headquartered in the United Kingdom, according to Tony Prothro, executive director of the Arkansas School Boards Association.
Prothro said the association began purchasing property damage coverage through Lloyd’s after claims from schools started increasing, which were mostly due to tornadoes, strong winds, hail damage and flash freezing.
While Arkansas has been hit with a spate of severe whether in recent years, storms across the nation also have contributed to the recent increase in insurance premiums — up anywhere from 100% to 200% for the 179 school districts the Arkansas School Boards Association covers, Prothro said.
“It’s a new reality for schools,” Prothro said. “We don’t know what the future is going to be like.”
Besides the school board association, most other schools receive their property insurance through the Arkansas Insurance Department, which covers 78 schools, according to Clark Cogbill, a spokesman for the Arkansas Department of Commerce.
Sanders laid the blame on insurance companies for the large increase in premiums, saying they are trying to take advantage of already financially strapped public schools.
“What these insurance providers are doing to our schools is outrageous,” Sanders said in a statement. “They gave districts no reasonable justification for skyrocketing premium costs. It’s clear that they’re just trying to line their pockets on the backs of Arkansas children and taxpayers. To prevent our districts from facing financial difficulties, my administration is stepping up to help them cover rising premium costs.”
No school in the state has been more devastated by recent storms than Wynne High School, which was destroyed by the March 31 tornado that killed four people in the small city in Cross County and another in North Little Rock.
The estimated cost to rebuild Wynne High School is $125 million which will be funded through insurance proceeds and local, state and federal funding.