By Bill Scott
KSBA Executive Director
When Kentucky’s board members and superintendents made the decision back in 1979 to start their own insurance program called Kentucky School Boards Insurance Trust (KSBIT), they did so because they knew their successors would have days like March 2, 2012. KSBIT’s response to the devastating tornados that swept across the Commonwealth on that fateful Friday is a powerful affirmation of the wisdom of their decision.
Ten of KSBIT’s member school districts experienced some form of damage from the March 2 storms. Although most of these districts were able to continue classes with little or no interruption, two of our districts, Morgan and Magoffin county schools, suffered unimaginable destruction to their schools and surrounding communities. As KSBA and our insurance partner, the Kentucky League of Cities, continue to assist school leaders in these hard-hit districts, I think it’s useful to mention a few of the lessons learned from this ongoing tragedy.
As KSBIT staff and partners became aware of the forecast for March 2, we sent out detailed information on claims reporting and other protective measures districts should take in case of property damage. We also urged them to review their own emergency response plans.
In the immediate aftermath of the storms, the first lesson we learned was the importance of having personal cell phone numbers for key contacts within the districts. In the absence of public utilities, including phone lines, cell phones became a crucial means of communication.
By Saturday morning, our regional agent and claims adjuster were on the ground in West Liberty and by Sunday they were in Salyersville. Their first priorities after ensuring that any injuries to school personnel or students were being properly addressed were:
• Meeting with district leaders;
• establishing lines of communication;
• surveying damaged facilities;
• securing unprotected property from weather, theft and unauthorized visitors; and
• approving emergency repairs.
In some cases, Kentucky National Guard troops’ search for survivors delayed our team’s access to school buildings, which was an unexpected challenge.
In the days that followed, KSBIT staff and partners also assisted in setting up temporary school sites and working with partners like the Kentucky School Plant Management Association to identify and transport other districts’ surplus property to the affected members.
Role of the Reinsurer
Like other public-entity insurance pools, KSBIT purchases excess or reinsurance to cover large losses. This means the KSBIT pool will pay a total of only $500,000 for all March 2-related claims across the state. Anything above this limit will be paid by our reinsurer, Chartis.
Realizing the catastrophic damage in Morgan and Magoffin counties, KSBIT staff immediately notified Chartis, whose representatives were on site by the first part of the following week, meeting with architects, engineers, and school leaders in both districts to evaluate the damages at each building and decide whether to repair or replace damaged structures. In addition, Chartis also provided KSBIT with a $5 million advance to reimburse tornado-related claims statewide and KSBIT in turn provided both Morgan and Magoffin districts with $500,000 to offset any expenses already incurred, thereby protecting their general fund.
This money, which can be used immediately without the usual delay of a reimbursement check, is covering costs such as overtime for hourly school employees who are cleaning up and the preparing temporary facilities.
Coverage is Crucial
The recent storms have also shined a laser on the importance of adequate sub-limits for specific types of coverage. Because of the inadequate coverage previously offered by many private insurance companies, in 2010 KSBA worked with the Kentucky Department of Education to revise 702 KAR 3:030, the regulation that defines the types and limits of insurance coverage for school districts. The result was an increase in sub-limits for two critical areas of coverage — debris removal and extra expense. The latter covers aspects of demolition and the impact of code changes.
Despite the recent changes in the regulation, school systems not insured by KSBIT should take the time to evaluate their current coverage for compliance with these higher standards.
KSBA understands that it hasn’t been easy for some of the school leaders involved, who are dealing with their own personal trauma, property loss and sense of normalcy. The association and our partners are continuing to follow up on this disaster, including working with key legislators on budget language that holds affected districts harmless for missed days and reductions in enrollment due to the temporary relocation of families.
Because this is your insurance program, I invite you to share any ideas or suggestions for improvement to Myron Thompson ([email protected]), our director of risk management, or me ([email protected]) at 1-800-372-2962.