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PACE Trustees work to hold down premiums

Property and Casualty Coverage for Education (PACE) Trustees spent much of their March 4 meeting discussing how to hold down premiums and inoculate districts from losses.

Mike Doherty, chief financial officer of the Special Districts Association of Oregon (SDAO), told trustees that an increase in liability claims and significantly higher costs for reinsurance had combined to raise premium cost estimates for the coming year. As a result, he said, PACE is looking for creative ways of obtaining property reinsurance.

Currently, PACE pays the first $250,000 of a property loss, and the balances of any larger claims are paid by reinsurers. To help keep down premiums to members, Doherty said PACE was considering increasing its liability to $5 million per occurrence and $7.5 million annually.

Even if those changes are made, Doherty said, premium renewals are expected to increase by at least 15 percent, and possibly as high as 25 percent. “Twenty (percent) is our target,” he said.

Frank Stratton, PACE manager, said that by increasing the cap from $250,000 to $5 million, PACE would also have a significantly greater number of reinsurers to choose from – as many as 30 instead of just a handful.

Staff also made a recommendation designed to encourage PACE members to consult with pre-loss attorneys before terminating an employee. Currently, PACE members incur a $5,000 deductible if they do not consult with pre-loss attorneys before taking that step; the recommendation was to increase the deductible in such cases to $25,000.

Lisa Freiley, the Oregon School Boards Association’s director of legal, labor & PACE services, said an OSBA attorney is available daily to consult with members on pre-loss situations. She said OSBA attorneys are always ready to provide advice on risks.

“Pre-loss attorneys are never going to tell you that you can't fire someone, but we’re going to explain to you the problems that might result if you do,” she said.

Geoff Sinclair, SDAO’s director of claims services, concurred. “We can't make or change someone’s local decision, but we want to make sure you have the best information before making your decision,” he said.

Trustees unanimously improved the deductible increase for members that do not consult with pre-loss attorneys before termination.

Trustees also discussed potential changes in how PACE underwriters calculate general liability premiums for employees or agents of members that have armed security. Any changes will be sent out with renewal notices.

More information will available at PACE Day in Portland on April 26. It’s free for the first attendee from PACE member organizations, and members are urged to attend. Register online for PACE Day.