In The Public Eye: Charter School Insurance Challenges
The success of education systems goes far beyond the classroom. This includes having the right coverages to protect faculty and students alike. Tom Boobar, Alliant Education Specialist, speaks with Carleen Patterson about the unique risk factors associated with charter schools and how risk managers are addressing particular challenges.
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Welcome to the Alliant In The Public Eye Podcast, a show dedicated to exploring risk management topics and challenges faced by today's public sector leaders. Here is your host, Carleen Patterson.
Carleen Patterson (00:19):
Welcome back, everyone, to another episode of In The Public Eye, we've talked a lot about the insurance market and what we can do to help drive results in the market, some of them are in our control, some of it is not in our control. And one of the things we want to talk about is a specialty within public sector, which is our charter schools and the experiences that they're seeing in the insurance market. So, what we've done today is to invite Tom Boobar who runs our charter school program to the call, to talk a little bit about what's going on in his area of expertise. So, Tom, welcome to the show.
Tom Boobar (00:58):
Oh, thank you, Carleen it’s a pleasure to be here. Thank you.
Carleen Patterson (01:02):
So, before we get started, could you spend a few minutes telling us a little bit about yourself, your background and what you do here at Alliant?
Tom Boobar (01:10):
Sure. My name is Tom Boobar. I've been at Alliant since 2004 and in the insurance business for the last 32 years and my life is insurance. I love it. My parents actually were teachers, and my sister was a teacher, and my brother was a teacher. So, my entire life has been education for a long time. And so, my job is to run the charter school and education practice across the country for schools in 45 different states. Now our job is obviously to place insurance for the schools, but the bigger issue of course for schools always is managing risk, right? You know, they got little kids, you know, running everywhere and there's a lot of risks that go along with schools. So, I feel really privileged in part of the community of education. And so that's my job, you know, help schools, and protect them.
Carleen Patterson (01:57):
Great. Well, we are happy to have you here at Alliant and happy to have you here on the call today. So, before we really get into the nuts and bolts of charter schools, can you tell me, what is the state of the market with regard to your expertise? We just passed 7/1 renewals. I know for most public entities; we've had a lot of challenges. How about for you?
Tom Boobar (02:19):
You know, my view of the education market in the last years, it's sort of stabilized, although there's still specific issues in this country that are going on - like catastrophic property issues. Everyone knows about that. You know, wildfires, wind, hail, you know, flooding - all of the catastrophic property issues of course are a big one. The other one for schools is the excess market, you know, the umbrella market for abuse and molestation, and of course we all heard about the cyber market also, you know, which continues to be difficult. Although I have a sense that the cyber market's starting to soften a little bit, you know, as there's more competitors, more insurance companies coming into the market, and my clients, the schools, and learning more about controls such as multifactor authentication and EDR, which is sort of endpoint protection items that their IT teams are putting in place. You know, it's changing a little bit, right? You know, the more controls there are, the better the underwriters feel comfortable about the risk, and I think, also, the underwriters, of course, are increasing their deductibles, right? This is what underwriters do is - when they want to get away from the risk a little bit, they increase their deductibles and they're going to reduce coverage a little bit, and that's sort of normalizing the cyber market as we continue to progress.
Carleen Patterson (03:36):
Yeah. That's something that we've seen across all of the subsectors within public entity is, you know, the better they are prepared when it comes to, you know, preparing from a cyber standpoint, the better they are. Let's go back to liability. You mentioned some of the challenges around liability in the excess. Are there specific issues that you are seeing as compared to maybe some of our city or municipal clients?
Tom Boobar (04:05):
Yeah, well definitely the abuse and molestation market, which is a very specific coverage to schools only, I mean, compared to cities and counties, which have risks in that area also, but schools of course have little ones right, under 18 years old. And so that area of excess for abuse and molestation has just been difficult. It's continuing to be because of the statute of limitations has been extended throughout various states in the country. For example, California assembly bill 218, which was very specific to the statute of limitations being extended. In California, it was 22 years past the age of 18. And so that's quite a long distance. And so that's changed the entire complexity of the excess markets who have to deal with this long tail of cover. And so that just reduces capacity, increases prices. And so that's really the issue in the excess market. I would say to stabilizing though, a lot of my renewals this year were more flat and there's a bit more insurance carriers willing to put up limit for that risk.
Carleen Patterson (05:13):
Just kind of diving into that a little bit more. Did you see when they first made those changes to the statute of limitations, was there a bump in the number of claims that were reported and now it's kind of leveling out? Or how do you see that impacting your frequency and severity?
Tom Boobar (05:30):
Yeah. Great question. Yes, is the answer. More claims that have hit, but they also, you know, the markets think there's going to be more in the future too. Right? So, it hasn't stopped. I don't see it changing. There's only going to be more of these that come up. And obviously that's why a lot of the insurance carriers are also doing retro inception. So, if they're on a claim made form, they literally won't even go back and provide much of a tail anymore. You know, a lot of the abuse of molestation has been on an occurrence-based form, although I'm also seeing it go to claims made now, so then, you know, you've got to purchase or have a tail to it or a retro date of inception. So going forward, I'm wondering, right, what's going to happen to the abuse molestation marketplace, you know, on a claim made basis. It's going to be difficult to get coverage for schools.
Carleen Patterson (06:18):
Yeah. Are you seeing where they're carving that coverage out from their quotes? Like they'll cover your traditional liability coverages but carve out the sexual abuse and molestation?
Tom Boobar (06:30):
Yeah. Some, you know, I would say though at Alliant, with our program, it's very rare actually. Yeah. I think maybe that's maybe higher education world, remember because the higher education world's very different than K12 of course. Right. You know, they're very different marketplaces. For us, I still see carriers and I'm talking about traditional carriers, not pooling business, not traditional guaranteed cost carriers, put up abuse and molestation coverage.
Carleen Patterson (06:55):
So, it sounds like it's a real challenging market for you. Working through your most recent renewals, were there any unusual terms or conditions that you saw come up other than how they've been handling the sexual abuse and molestation?
Tom Boobar (07:08):
Yeah. Good question. You know, I think in this entire market, all lines of coverage, there's pressure on deductibles. You know, underwriters like to do that. They like to just increase deductibles, particularly in the area of employment practices, any professional liability coverages. These deductibles have absolutely doubled in my world. At least for schools, we had relatively small $10,000 to $15,000 deductibles for employment type cases. And now, you know, they're 25, 50 or 100 thousand dollars deductibles. So, our schools just have to manage that risk more, in some ways, you know, deductibles force the schools to have better practices, better controls in place for their employment issues, onboarding, offboarding, harassment, discrimination, wrongful termination type situations, and then of course, cyber too, I mentioned right. You know, deductibles are going from, it used to be a thousand dollars deductible. It's crazy, right. And now, you know, it's $10,000, $15,000, $25,000, $50,000 deductibles, so schools just have to manage more of their risk. Those are the big issues on terms for this year.
Carleen Patterson (08:13):
All right. So, could you talk a little bit about maybe one or two creative things that you've been able to do recently in the public entity or charter school programs?
Tom Boobar (08:25):
Absolutely, the biggest thing right now is cyber. And so, you've got to be creative when it comes to cyber placement and helping your schools. And so, what we've done more than anything is develop a sort of an IT, technology risk discussion assessment to help them sort of prioritize how to handle the protections around cyber, essentially also creating a toolkit for them and even guiding them through the application itself, because I'm not sure about you, but even risk managers and finance professionals have no idea how to even read the applications. You know, there's 10 pages of applications. It's literally getting down to a very specific IT question that none of us really understand. Right. You know, and I'm even personally taking IT classes. Of course, I understand the coverage really well and I've taken courses on the coverage language and the definition of wrongful act. I've gone to lengths to understand the coverages, but you know, honestly you have to understand the application. And so, what we've done is we've created these meetings and sort of these forums with the risk manager, the CFO, and the IT team to literally go through every question and then match up the controls they need to put in place, MFA, EDR, you know, endpoint, software protection, all these various things that they have to learn about and so that they're proactively ready to even actually complete the application. Because you know, underwriters are people we always forget that sometimes underwriters are real people, and so they look at these things and they want to feel comfortable that the risk is being controlled as much as possible. And so, it's a really cool thing, you know, including toolkits, not just for cyber, for employment practices and other things, instituting toolkits and training and helping our clients, holding their hands through all of the risk issues that associate with risk management, those are all vital things to help our schools get through it.
And so those are some creative things. I would say also, you know, another thing is wildfire, right? Especially California, we're running wildfire score for all of our schools proactively. I also do this for PMLs too for earthquake, flood. So, we're running scores for all of our schools so we can identify, hey, you might have a problem here soon, and so do you need to have a hazard prevention plan in place, something like that that'll help you sort of, you know, characterize your risk for an underwriter. Because at the end of the day, that's our job, right, is to make sure the underwriters feel comfortable with the risk that they're underwriting. Because that ultimately leads these to lower deductibles, better terms, higher limits. And of course, ultimately less premium, you know, those are all the nuances that you have to understand when you start working on these things.
Carleen Patterson (11:09):
Yeah, definitely. That sounds really interesting, because for us, it's always trying to differentiate our client from the rest of the clients that are being submitted. So having a score like that sounds like it's a real differentiator.
Tom Boobar (11:23):
For sure. You know, it's a score, you know, there are embers that fly in the air into an area that's not scored by the way. So, embers fly, embers fly, but you know, it's, it's something that we need to think about. You know, and then things like any catastrophic peril, you know, you know, remember we always think of wind, don't we? South Florida, right? Or I have schools in Louisiana or Eastern side of Texas or whatever. What we forget about though is hail, hail is actually - there's this hail zone in certain areas of the country, like in Missouri or something in the middle of somewhere where there's not normally these kinds of perils and it’s a very difficult market in that area. So, it's our job as brokers to identify areas throughout the country, based on peril, based on location, to know what your risks are before you even have to think about it. Our job is to anticipate your risk, match risk management with the ultimate transfer of risk, which is buying insurance. But buying insurance is the easy part. You know, I've done this 32 years, the management of risk. That's where the differentiator is. That's the challenge. That's the special sauce, that differentiates niche leaders in schools or cities, counties, you know, overall, to real risk management, help for our clients. Any broker can place a policy, but we manage risk and with an intimate knowledge of risk that other competitors don't have.
Carleen Patterson (12:49):
Absolutely totally agree with you. Yep. Thank you very much. And my thanks to you, Tom, for joining today. It is a challenging time to be in risk management. And here at Alliant, we focus on providing continued information and resources as we navigate 2022 and beyond. Thanks a lot for listening.
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