Pembina Hills trustees passed a motion during their May 27 meeting to withdraw from the division’s old insurance provider and join the Genesis Reciprocal Insurance Exchange (GRIE), which will hopefully allow the division to avoid another massive hike in insurance premiums.
Originally, Pembina Hills and other school boards throughout the province were part of the Alberta School Boards Insurance Exchange (ASBIE), which had been formed in 2002. ASBIE was owned and operated by school boards.
In the fall, a higher frequency in weather-related catastrophes like fires and floods prompted ASBIE to massively hike its insurance rates, particularly for property insurance.
Pembina Hills suddenly saw its insurance premiums skyrocket from $376,825 in 2018-2019 to $993,550 in 2019-2020, which works out to an increase of 164 per cent.
Secretary-treasurer Tracy Leigh said 100 per cent of the boards associated with ASBIE gave notice that they would withdraw from the reciprocal and begin searching for a new insurance provider.
Leigh said nine school boards ended up banding together to form a purchasing group called the Alberta Risk Managed Insurance Consortium (ARMIC). Pembina Hills initially signed a letter of intent to join ARMIC while exploring other options, Leigh said.
However, Pembina Hills also received a quote from the Genesis Reciprocal Insurance Exchange, which is operated by Jubilee Insurance Agencies Ltd. (Incidentally, this was the division’s insurance agency back in 2002.)
GRIE was formed around the same time as ASBIE’s creation by the Alberta Association of Municipal Districts and Counties, which is known today as the Rural Municipalities of Alberta (RMA). Leigh said it was created as an alternative to the old insurance reciprocal that school boards were originally part of.
However, the Pembina Hills school board of the day decided to join ASBIE because they didn’t have pricing available, Leigh indicated.
ARMIC has provided a quote of $393,276 based on the current year’s pricing, although they have also indicated that rates for low-risk subscribers like Pembina Hills are expected to increase between 10 to 20 per cent, while high-risk subscribers will see a 100 per cent increase.
“We are confident that we are a low-risk subscriber, since we have only had one property claim, which is the highest risk to insurers due to recent fires and floods,” said Leigh.
Meanwhile, GRIE has provided a quote of $349,152. While this amount does not include facility user group, blanket student accident, volunteer accident, contract bus operator or standard garage coverage, it is estimated that will add another $26,000 on to the cost. In short, the total quote from Genesis comes out to $375,000.
While it is a reciprocal, Leigh noted the RMA is financially healthy, having been around since 1986, and Pembina Hills would not be required to make reciprocal payments as they would with ASBIE or ARMIC.
That basically means if the reciprocal ever dissolved, they wouldn’t get any money back from it, as they have no equity position, Leigh said.
However, the process of getting money from a reciprocal is long — she said it took 15 years to get money from the very first reciprocal that they were a part of.
As such, administration’s recommendation was to officially withdraw from ASBIE and join GRIE.
Board chair Jennifer Tuininga stressed to the other trustees that the quotes they were given by ARMIC and GRIE are very “soft numbers,” as she had learned from sitting in on insurance-related meetings for a number of months that it was too early to accurately guess the rates they would be dealing with.
Leigh stressed there were a lot of unknowns in staying with ASBIE, as a lot of boards seemed to be leaving and that would force low-risk subscribers to take on the liability of high-risk subscribers.
“ARMIC has had some very good meetings with us, and are well-set up, but they are a new reciprocal and … there’s a much more hands-on requirement there,” she said.
After trustees passed a motion accepting administration’s recommendation, Tuininga said finding a new insurance provider meant a lot of extra work for Pembina Hills staff but “we are looking forward to having insurance rates that are perhaps more reasonable than last year.”
