After several consecutive years of double-digit commercial property insurance rate increases, there is still no end in sight to the challenging insurance buyer marketplace or the factors contributing to it. As a result, you may be thinking it’s impossible to have any control over your school’s rising insurance costs. However, at Fred C. Church, we believe you can regain power over your premiums by taking a property risk management approach.
This approach requires a school to think proactively and purposefully about how they plan to construct, maintain, and repair their campus buildings for sustainability in the face of a wide array of threats. By establishing a property risk management process that is endorsed by a cross-functional team of stakeholders, a school can demonstrate to its insurance carriers a strong committment to:
- Understanding its property risks.
- Planning and budgeting to address these exposures on an ongoing basis.
- Actively reducing property losses and minimizing claims.
Just the due diligence of creating the process can pay off for a school, making it a more attractive risk to its current insurance carrier. On the other hand, educational institutions that don’t invest time and resources in a property resiliency and sustainability effort may find their insurance company, as well as other carriers, reluctant to continue working with them.
A property resilience approach is something that all schools, no matter their size or resources, can adopt and adapt to their specific needs. The most critical factor for success is a belief and conviction in its importance. In other words, do the key stakeholders at the institution believe in and understand the need for improving the resiliency of the campus? Once that buy-in is secured, any school should be able to implement this process and customize it to fit their specific timeframes, budget, and capacity.
The 4 Steps to Managing Your School’s Property Risk
To help guide you through this process, Fred C. Church has developed a “Road Map for Enhancing Property Resilience.” This approach should be an ongoing cycle that includes the following four main phases:
- Risk Management
- Finance
- Environment, Health, and Safety (EHS)
- Facilities Management
- Sustainability Team
- Environmental, Social, and Governance (ESG)
In addition, your insurance broker, your current insurance carrier, and any third-party vendors that may need to be consulted during the process, such as contractors or consultants, should all be participants in this project from the beginning.
2. Assess: In this phase, your committee identifies your school’s existing and emerging property risks and vulnerabilities, as well as the conditions that might affect the ability of your institution and its physical assets to adapt to, withstand, or recover from these threats. This part of the process is likely to take some time and require all hands on deck because it involves:
- Inspecting all campus property.
- Collaborating with your insurance broker and carrier to calculate loss expectancies.
- Utilizing third-party vendors to help estimate direct and indirect costs of making any prescribed changes.
3. Prioritize: It’s unlikely any school, no matter the size, has the funding or capacity to check off every item on their list of risks all at once. We recommend considering criteria like the following as you prioritize your concerns:
- Which actions require the least amount of resources to deliver exceptional return on investment?
- What are your insurance carrier’s most significant concerns and can you align your priorities to address them?
- What academic programs are the most important to your school?
- Is there low-hanging fruit that can be accomplished with minimal budget and planning? If so, it may be smart to put these projects at the front of the line. By checking off a few small items right away, it can demonstrate to your insurance carrier that you’re dedicated to getting things done.
4. Strategize: From priority number one to the last risk on your list, you must create a directive as to how and when each risk will be addressed, monitored, reviewed, and regularly reassessed. For example, if the exposure is repairing a roof, some of the discussion points for a plan to address it might be:
- Can the roof be repaired or does it need to be fully replaced?
- When is the best timing to do this work based on the academic and summer schedule?
- Will students or departments have to be relocated during construction and where will they go?
- Should you stick with the normal roof warranty or invest in an extended one?
- If you repair/replace it now, what is the expected life span of the roof and how can you make sure you have funding to replace it at that point in the future?
Of course, step four is not the end to this journey. It’s critical for all stakeholders to convene on a regular basis to review the status of projects aimed at improving previously known exposures and any new exposures that have been uncovered. These meetings are also an important time to take stock of your sustainability objectives to ensure you are staying ahead of trending property risks.
As You Build Your School’s Property Risk Management Process, Get the Support of an Experienced Team
Establishing a property risk management process is not something that is generally done in a few days, weeks, or even months, so there’s no better time to get going on it than today. At minimum, though, we recommend you start down the road map we’ve shared at least six months prior to your upcoming insurance policy renewal date. Why this timing? Many insurance companies are now visiting campuses during the renewal period to get a first-hand look at the condition of the properties they are insuring. Having your property resilience framework in place puts you in the driver’s seat if they do an onsite inspection because you’ll already know about any risks they identify and potentially already have a plan and budget to address it.
Please know that Fred C. Church is available to support you in navigating the road map for enhancing property risk management and adjusting it to your specific campus and its buildings. Whether we serve as your insurance broker of record or you would like to enlist us as a project consultant/coordinator, our role can span from helping you form a committee with a collective mindset to being a gatekeeper of information that gets shared with your insurance company. In addition, as experienced risk management professionals, our participation will help you better understand your school’s exposures and make more informed decisions about how to improve your risk profile by managing, transferring, and/or mitigating these hazards. We invite you to reach out to our Education Practice Group for more information.