The owner of a local insurance company whose family has been doing business with Topeka Unified School District 501 for more than 50 years is taking exception with the district’s recommendation to enter into a new risk pool for property and liability insurance.
Dennis Payne, of Brier Payne Meade Insurance, told USD 501 board members he and his father before him have had a “long history” working with the district and that he was “sick to death” that USD 501 wanted to enter into the Kansas Educational Risk Management Pool that was created in July 2015.
Payne said he was aware district officials were considering entering the risk pool but would have liked to have been given the chance to present his company’s proposal for continuation of property and liability coverage to the board’s three-member financial committee. He said he wasn’t given that chance but a representative from the risk management pool was afforded the chance to make a proposal to the committee.
“We were told by the finance committee that we’d have the opportunity to come and present and rebuttal if you will,” explained Rob Metzler, of Brier Payne Meade. “We were excluded from the process.” He said the risk management pool “has limited guarantees.”
“If this pool fails, then the district is on the hook for the impending unknown liabilities for the indefinite future,” he said. “There is no insurance company that stands behind when the pool notifies the state that it’s no longer an operational entity. The district assumes the liability for all outstanding claims.”
Gary Menke, USD 501’s general director of fiscal services, said while Brier Payne Meade “have been good partners” with the district, he told board members he stands by his recommendation to go with the risk management pool that 21 Kansas school districts belong to, USD 501 being the largest in the number of students.
“They’ve done business with Topeka Public Schools for 51 years,” Menke said of Brier Payne Meade. “We know what they do. We understand the traditional services. This is a different product.”
Menke said Brier Payne Meade’s proposal for property and liability insurance was $44,000 more than the risk management pool’s proposal for the same coverage with cyber protection coverage added. He said going with the risk management pool would also lower premiums for that coverage by an estimated $154,000 in the coming year.
“Competition has a tendency to lower the bar, and it lowered it quite a bit,” Menke said, in explaining the decision to go with the risk management pool. “The reality is for some Kansas school districts without a pool, they have a very difficult time finding insurance carriers to write coverage, in certain instances, unless they’re pooled.”
Menke said after the 2011 wind and hail damage done to many of the district’s schools and the fire that damaged Topeka High School’s roof, Travelers Insurance, provided by Brier Payne Meade, was the only company that was providing coverage.
“As hard as Brier Payne worked,” he said, “there weren’t five other large insurance carriers who were interested in this business. That’s not how it works. They do get to decide what markets they enter and what markets they don’t.”
According to the website “Risk & Insurance,” the Kansas districts in the two-year-old pool have “realized immediate benefits” that include “an average 26 percent reduction in premium; an average 500 percent reduction in property deductibles, including wind and hail-specific deductibles; 100 percent increases in collective liability limits, including general liability, school board legal and all other professional liabilities; and a potential dividend/surplus return of up to 13 percent of premium.”
Charlie Herr, the program administrator for the Kansas Educational Risk Management Pool, said the pool has $2 million in an “aggregate stop-loss fund” which provides insurance on the claims fund.
Menke said the property and liability coverage has to begin Oct. 1. He said Brier Payne Meade will continue to provide third-party workers compensation and coverage for builders’ risk on the district’s bond issue projects.
After approving to pull the contract from board’s consent agenda and vote on it separately, board members voted 5 to 1 to approve the contract with the risk management pool. with Scott Mickelson casting the lone “no” vote.
Board president Mike Morrison didn’t attend Thursday’s meeting.
Contact reporter Angela Deines at (785) 295-1143 or follow her on Twitter @AngelaDeines.