The Galveston, Texas, school board voted to triple its insurance payments to keep up with higher rates for windstorm coverage.
With hurricane season approaching, the coastal district will pay $1.3 million in premiums to cover about two-thirds of its assets.
The district paid $446,000 for its current policy, which expires Saturday, to cover all of its buildings. Coverage for all of the buildings would have cost $1.8 million this year, officials said.
Interim Superintendent Ann Dixon said the district’s budget is already stretched by energy costs. The district will probably have to cut personnel to find the insurance money, she said.
“Were not talking about buying an extra teacher or something, were talking about more than $1 million that’s not in the budget,” she said.
“It is very troublesome that a school district must make these kind of choices, but predictions from hurricane experts indicate that the 2006 storm season will equal or surpass the number of catastrophic events of 2005. Insurers must have the money pay claims and that can only be achieved by increasing premiums,” Jerry Johns, president of the insurer trade association Southwestern Insurance Information Service, told Insurance Journal.
Garry Kaufman of Galveston Insurance Associates, the district’s agent, said the higher insurance rates are likely an overreaction to the fact that industry models failed to predict the violent 2005 hurricane season.
Other entities on the barrier island face increases as big as 600 to 700 percent, he said.
Information from: The Galveston County Daily News, www.galvnews.com.
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