Construction to renovate and repair Clarkdale School's Building 300, heavily damaged by a tornado in 2022, gets underway during the 2023 Christmas break.

Just as finishing touches are being made to Building 300 on the Clarkdale campus, heavily damaged from a tornado in 2022, Lauderdale County School District officials are getting slammed by the sticker shock of skyrocketing property insurance premiums.

This year, the district will pay roughly $285 per pupil, or more than $1.67 million, for property and casualty insurance premiums, a more than $600,000 increase over last year’s premiums. The district also was left shopping around for a new provider after Liberty Mutual elected not to renew its property and casualty coverage.

“The state of the property and casualty market, due to weather and claims, has changed rapidly since we were here last year at this time,” Corey Dale, of Fisher Brown Bottrell Insurance, told school board members during a regular monthly meeting last week.

“We’ve had some substantial hits over the last couple of years that have really affected the insurance market,” he said.

School districts are seeing an increase in property damage claims with more frequent natural disasters — storms, tornadoes and freezing winter weather — hitting the state, along with aging school buildings, many without sprinkler systems.

In March 2023, for example, seven school districts across the state incurred damage during a severe tornado outbreak, including millions in damage to Amory High School in the northeastern part of the state and South Delta High School in Rolling Fork. Moss Point High School was damaged by a tornado last June, while Tylertown High School received roof damage from straight line winds earlier this year.

Lauderdale County School District is not alone in being dropped by Liberty Mutual and many other school districts have seen as much as a 50% increase in their property insurance premiums by their providers in the last couple of years, Dale said.

“There were some districts that (Liberty) offered some non-renewals on that were clean, that did not have claims, strictly because they already had so much insured in a certain county,” he said.

“There’s no secret they’ve paid out more claims than they’ve taken in in premiums, and if they cannot be profitable, then they’re just not going to stick around,” Dale said.

In the Lauderdale County School District, work is nearing completion to the Clarkdale School campus, which was hit by two separate tornadoes in spring 2022. The storms caused significant damage to the school’s softball field and more than $1.2 million in damage to Building 300, which houses elementary classrooms.

LCSD Superintendent John-Mark Cain said the significant increase in insurance premiums was not due solely to the Clarkdale damage, but is a continuation of a trend that has been going on for several years. He said the district’s property and casualty premiums have increased close to $1 million from five years ago.

“The last two to three years, we have seen the biggest jump in premiums which coincides with the number of storms we have seen come through our state,” Cain said.

Liberty Mutual, he said, is just looking for a way to lower its risks as claims by school districts have outpaced premiums.

“They look at it as a risk-reward and right now their loss ratio is 150%,” he said.

With no other insurance companies offering a coverage plan or separate line policies, the county school board had no choice but to approve a property and casualty insurance coverage plan with the Mississippi School Board Association.

“A lot of districts have already faced this in the past, and a lot of them have already been with the Mississippi School Board Association,” Cain said. “We were lucky enough that we had not gotten to that point, but now we are to that point and that really is our only option.”

Under the association’s plan, the deductible for the district is 3% of the value of a potential loss with a minimum deductible of $100,000.

Many standard policies are changing to require up to 5% of the value and a $250,000 to $500,000 deductible per location and not per storm, which can be a significant expense if more than one building is damaged in a tornado, Dale noted.

“The wind and hail deductible through this program is a 3% with a minimum of $100,000 and that’s per occurrence for one storm,” he said. “So it’s a much different deductible set up with the Mississippi School Board Association.”

For the school district, Cain said the $1.67 million equates to roughly $1.70 per square foot to cover the school system’s physical assets, including buildings, furniture, equipment, supplies, computers and electronics, athletic facilities, buses and other property.

Carolyn Davis, chief fiscal officer with the Meridian Public School District, said MPSD’s property and general liability insurance coverage premiums have risen annually for the last several years but not as significantly as the county district is seeing. This year, MPSD is looking at roughly an 8% increase to more than $578,000 in property insurance premiums, almost double what the district used to pay for coverage more than five years ago.

With school districts struggling to afford the skyrocketing insurance premiums, Cain said the state needs to get involved to help come up with a working solution.

“It is an issue the state needs to look at to see if there are any viable solutions to help districts address the soaring costs of insurance,” he said.

Dale agreed, saying “Moving forward the state’s got to get involved, I think, and try to come up with some creative ways to do this. I mean it just continues to climb year after year.”