A tornado destroyed South Iron School in southeastern Missouri in May just a day before students headed to summer break. A hail storm totaled buses last year in a St. Louis area school district.
A freeze-thaw event in the 2022-23 school year caused pipes around the state to burst when schools were on winter break — especially in rural areas, where staff weren’t in buildings as often.
Climate change has driven up the number of storms, hail, tornadoes and other extreme weather events in Missouri in recent years. Those storms are causing more damage and wear and tear to school buildings.
The Missouri United School Insurance Council, a nonprofit that provides coverage to 90% of the state’s school districts, said the cost of paying out claims has more than doubled since 2017. In 2024, the group had to increase its rates for schools for the first time in nearly 20 years.
Because of rising storms, it will have to raise rates again in 2025.
Ron Orr, MUSIC’s executive director, said costs went up over time, but at a stable rate until 2023.
“It just kind of exploded,” Orr said. “And 2024 has just unfortunately been much, much worse.”
Homeowners and school districts across the country have grappled with skyrocketing rates for property insurance in the wake of extreme weather events like wildfires, hurricanes and flooding.
Districts in New Orleans, Alaska and Arkansas have seen insurance premiums increase upwards of 30% in a single year. In areas frequently hammered by extreme weather, some homeowners find they can’t buy insurance at all.
Pooling risk in Missouri
Schools can purchase insurance directly from a carrier, self-insure or opt into an insurance pool.
The Missouri United School Insurance Council is a self-funded risk pool. It uses the insurance cost schools pay to cover claims. When a claim is very large, MUSIC goes to the private insurance market to buy “excess coverage.”
Orr said that model help keeps prices low and services tailored to Missouri schools.
“We're not part of some large corporate structure that has overhead and what have you,” Orr said. “We're generally able to be much cheaper.”
As a nonprofit, MUSIC can return money to school districts when its reserves reach a certain point. Orr said MUSIC returned about $150 million to Missouri schools from 2011 to 2023.
When the risk pool buys excess coverage from private companies, those rates are often higher to account for the hurricanes, wildfires, and storms in all the regions covered by the private insurer.
Intensity and rate of destructive events has increased
Dr. David Buck, superintendent of the Lee’s Summit School District, is a member of MUSIC’s board of directors. He said more frequent property damage from weather events has forced the group to charge more.
Insurance companies used to consider wind and hail a “secondary concern” because they were rarely so destructive that they caused major, costly damage.
“They're no longer considered secondary perils, because the intensity of them and the rate of them have increased,” Buck said.
Buck said the pool’s nearly 500 members didn’t have to pay out $20 million in property damages until 2019. In 2022, they paid $27 million, then $38 million in 2023. By the end of July 2024, Buck said the group had already reached $43 million in property damage.
MUSIC charged 15.39% per $100 of assessed building value. Buck said it raised those numbers to 16.60% last year — which he says was its first hike in nearly two decades, but still below the industry standard.
Other factors are driving insurance rates up. Rising construction and labor costs drove up the value of buildings, making them more expensive to insure.
Independence superintendent Dr. Dale Herl said his district’s property was valued at $650 million in the 2020-2021 school year. When Independence renewed for this year, that jumped to about $955 million.
“Even if you don't have a complete overhaul of a building, having to replace it, just the cost of services to do the work has gone up substantially,” Herl said.
Independence gets its insurance independently because Herl said it’s large enough and has low enough claims that it saves money by doing so. Still, Herl said property insurance increased from about $650,000 in the 2020-2021 school year to a $1.7 million premium this past renewal, even though the district tried to bring that down by raising its deductible from $25,000 to $1 million. He said it hasn’t made a claim in a “number of years.”
He said fewer contractors and builders are willing to bid schools now, so there's less competition in the marketplace — which also drives up insurance costs.
Other area school districts have seen similar challenges:
- The Blue Valley School District is insured through Travelers and had a $597,764 premium in the 2019–20 school year. It nearly tripled to $1,564,123 in the 2024-25 school year, which district leaders attribute to increases in the number of insured buildings, equipment and property value. It said insurance company rates are also higher because of extreme weather conditions.
- Liberty Public Schools said its premiums have increased 68% in the last five years because of an increase in weather incidents and property valuation, and the addition of new buildings. The district receives property coverage through Midwest Public Risk.
- North Kansas City Schools paid $254,000 for property insurance in 2019 and $1.15 million in 2024 to Chubb. It changed insurance carriers, and said both the rate and property value covered has increased.
- The Fort Osage School District’s current property insurance rate is $414,155. Five years ago, it was $341,266. It attributes the increase to higher interest rates and added square footage.
- The Shawnee Mission School District is insured through Travelers and its property insurance premium was $1,762,510 for the 2024-2025 school year. It was $549,541 in the 2019-2020 school year.
“Plan for the worst and hope for the best”
The Independence School District sets aside $1 million in its capital project funds to cover large claims.
Buck, in the Lee’s Summit School District, said schools have to eat the cost of insurance increases in their existing budgets. He said his district tries to spend about 82% to 85% of its budget on staff salary and benefits.
“Every time we have these increases in the other 18 to 15%, it just takes away from what we can funnel to the classroom,” Buck said.
Orr said MUSIC hires actuaries to plan future rates. A high-claim year like 2023 could have been an anomaly, but now that it’s happened two years in a row, the group plans on future years being similar for the time being.
“My philosophy has always been ‘plan for the worst and hope for the best,’” Orr said. “That's a lot what the actuary is going to drive us to do with rates as we move forward.”
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