Edmonton

Insurance hikes shock Alberta school districts

Alberta school districts are facing steep rate increases for insurance this year, more than doubling in some cases.

'When we had budgeted for the school year, we didn't anticipate that kind of an increase'

Wolf Creek Public Schools is one of many districts in Alberta facing a steep insurance hike this year. (Wolf Creek Public Schools)

Alberta school districts are facing steep rate increases for insurance this year, more than doubling in some cases.

For Wolf Creek Public Schools, a central Alberta district based in Ponoka, insurance costs will rise from $578,000 to $1.6 million.

"When we had budgeted for the school year, we didn't anticipate that kind of an increase," said superintendent Jayson Lovell.

The district's board plans to use its limited reserve funds to cover the cost.

Parkland School Division, based in Stony Plain, west of Edmonton, faces a hike of $1.3 million. Its board is exploring alternative insurance providers.

While most districts pool their resources to get better insurance rates, it hasn't shielded most from dramatic rate hikes. 

Edmonton Public Schools, a member of the Urban School Insurance Consortium, will pay $6.1 million for insurance this year, a 35-per-cent increase. 

"This increase in insurance rates is not ideal; however, given recent market conditions, this was the best rate we could attain," CFO Todd Burnstad said in a statement. 

"Our district hopes that, with continued good risk management practices in place, the increase in insurance rates should begin to decline in 2021–2022."

Fort McMurray Public School Division, another member of the consortium, faces an increase of between 40 and 50 per cent, according to Allan Kallal, associate superintendent of business and finance.

More demand, fewer companies in the market, and environmental disasters like forest fires and floods have driven up rates, said Marshall Sadd, executive chairman of Navacord, parent company of Lloyd Sadd which buys insurance for the Alberta School Board Insurance Exchange — the biggest provider of school insurance in the province.

Weather damage costs hard to predict

Insurers believe climate change is driving more weather-related catastrophes, like fires and floods.

"What they're struggling with is how to price for it, because it's happening on a more regular basis than history would allow them to understand," Sadd said.

One unforeseen consequence has been the high cost of cleaning school buildings damaged by wildfire smoke.

"When the smoke occurs at these properties, there's an expectation for health reasons that they are cleaned extremely well," Sadd said. 

"That's just a big, big expense that probably wasn't considered a number of years ago."

Still, Sadd predicts prices will start to settle down in the latter part of 2020. 

Rates calmed down after spiking in response to 9/11, he said. For the past 15 years, school districts have seen deflationary prices.

"This is a cycle," he said. "We'll start to see competition come back and rates ease off a bit."

Lovell said school officials are looking to the provincial government for help in managing higher insurance rates, should they continue. 

Education Minister Adriana LaGrange is aware of the issue, a spokesperson said.

About the Author

Madeleine Cummings is a digital journalist with CBC Edmonton.

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