Education

Schools Face Increasing Violence

Physical contact between students and teachers in one Minnesota school district tripled over the past five years.
By: | December 5, 2016 • 4 min read

Eight of 10 teachers nationwide report being victimized by students at least once in a school year.

The U.S. Department of Education said it’s a national crisis with both obvious and hidden costs for teachers and districts. In a July 2015 report addressing teacher victimization by students, (i.e., harassment, theft, property damage and physical attacks) the department cited more than $2 billion lost annually and lost work days approaching one million.

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Bill Mayo, executive director, New Jersey Schools Insurance Group, is not surprised.

“We have incurred costs of more than $50 million in wage replacement and direct medical care over the last 10 years for workers’ compensation costs in categories of assaults on teachers,” he said. “And that doesn’t include soft costs like replacement teacher training over time.”

Bill Mayo, executive director, New Jersey Schools Insurance Group

Bill Mayo, executive director, New Jersey Schools Insurance Group

Mayo’s group operates a joint insurance fund on behalf of 400 school districts and the teachers’ collective bargaining units.

“We see injuries occurring from teachers breaking up an altercation between students, which is the second most frequent type of an injury,” he said. The most frequent stems from acting out by students with special education needs.

“The smallest category, probably representing about 5 percent or less, involves a direct attack on a teacher outside of a special ed environment.”

That’s not a large percentage and certainly is in accord with the Department of Education’s statistics, but extrapolate that 5 percent of student assaults to the 3.1 million teachers working in the U.S., and it equals more than 150,000 teachers reporting some form of physical assault this year.

And those would be only the ones actually reporting an incident.

Legislative Action

Someone surprised by the numbers is Mark French, president of the Minnesota Elementary School Principals’ Association and co-chair of the Student Behavior Workgroup created by the Minnesota legislature last year.

The group’s creation followed media reports of increased violence against teachers.

“While it does surprise me,” said French, “I can see why it might happen because schools are having to work with students who are coming [to school] with more home, family, community and society health issues.”

At Minnesota’s largest school district, Anoka-Hennepin, physical contact involving teachers and students tripled between 2010 and 2015, while the rate of student-related workers’ compensation claims at Minneapolis schools climbed from four incidents for every 1,000 students in 2010-2011 to seven in 2015-2016.

As a result, French and other school principals in Minnesota are interested in not only suspending or expelling aggressive students but in “what we can do up-front through programming like social and emotional learning, restorative justice and practices.”

French also acknowledged the enormous public liability interests at the center of the issue, which are now under consideration by Minnesota legislative committees, but are complicated by privacy concerns.

“Do school teachers and employees have the right to know about the history of an aggressive student who in enrolling into their school? There’s been keen interest in that,” French said.

Martin Brady Executive Director Schools Insurance Authority

Martin Brady
Executive Director
Schools Insurance Authority

Martin Brady is less convinced by the Department of Education’s numbers. The executive director of Schools Insurance Authority in Sacramento, Calif., said that in 2014-2015, it received 50 workers’ compensation claims related to student assaults on teachers.

A year later that rose to 75 claims; a 50 percent increase, yes, said Brady, but still a relatively small number with no real change in the severity of incidents.

“Fifty percent of these claims are due to special ed [students] and are typically bites and scratches. The other half is breaking up fights,” he said.

California’s experience appears to be borne out at school insurance pools across the country. Pools from California, Ohio, Idaho and New York cite so few claims that they consider student assaults on teachers a non-issue among their members, according to the Association of Governmental Risk Pools (AGRiP).

Another pool in the Midwest said there has been a modest increase in these sorts of claims, though the trend is far less troubling than other pools might feel.

One pool in the South has seen an increase of about 10 percent in the number of such claims in the last three years, but a decrease in severity — the total cost of claims even amid an increase in frequency has remained flat, AGRiP said.  And the average cost of these injuries is less than the pool’s remaining book of claims, it reported.

Still, Brady sees wisdom in reducing the risk of student assaults on teachers and lowering workers’ compensation and public liability claims. One example is external programming like California’s Community Matters, an innovative program designed to improve the social-emotional climate at Sacramento’s schools.

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Its efforts mirror programs in New Jersey schools that analyze student behavior among “brittle” children, whose medical conditions and home environments put them at a higher risk of acting out or committing violence than other children.

What will not work, Brady stated categorically, are the more militant steps being promoted, often by people and politicians with little direct experience or understanding of the school environment.

“What I’m strongly convinced of after 30 years in this business is that guns and gates and alarms and cameras and metal detectors don’t work. We have to look at the psychosocial component and at cultural changes.”

David Godkin is a freelance magazine writer based in Toronto. He can be reached at [email protected]

Business Interruption Risk

Hidden Risks of Violence

The Las Vegas shooting and other tragedies increase demand for non-physical damage BI coverages. The market is growing, but do new products meet companies’ new needs?
By: | December 14, 2017 • 5 min read

Mass shootings in the United States and the emergence of new forms of terrorism in Europe are boosting demand for insurance against losses caused by business interruption when a policyholder suffers no direct property damage, according to insurers.

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But brokers say coverage for non-physical damage BI (NDBI), needs to evolve to better meet the emerging needs of corporate clients.

For years, manufacturing clients sought a more comprehensive range of NDBI coverages, especially due to the indirect effects of natural catastrophes such as the Thai floods that disrupted global supply chains in 2011.

More recently, however, hospitality and entertainment companies are expressing interest as they strive to adapt to realities such as the mass shootings in tourism hotspots Las Vegas and Orlando and terror attacks in such popular destinations as New York, Paris, Berlin, Barcelona and London.

In addition to loss of life and property, revenue loss is a real risk. Tragedies that cause a high number of fatalities can cause severe financial losses, especially for companies relying on tourism, as visitors shy away from crime scenes.

Precedents already exist. Paris received 1.5 million fewer visitors than expected in 2016, after the French capital was targeted by a series of deadly terror attacks the year before.

More recently, bookings declined in the immediate aftermath of a shooting at the Mandalay Bay Resort and Casino in Las Vegas that took the lives of 58 people on October 1: Bookings at the hotel have since recovered.

Joey Sylvester, national director of operations & planning, Public Sector, Gallagher

“The recent horrific mass shootings in Las Vegas, Nev., and in Sutherland Springs, Texas, raised awareness and concerns about similar events occurring in areas where the public congregates, such as entertainment venues like sporting events, concerts, restaurants, movie theaters, convention centers and more,” said Bob Nusslein, head of Innovative Risk Solutions Americas, Swiss Re CS.

“The second highest NDBI cover to natural catastrophes is terrorism, including active shooter and mass shootings.”

However, products available in the market do not always provide the protection companies would like. Active shooter coverages, for example, focus mostly on third-party liabilities that policyholders may face after a shooting.

Loss-of-attraction policies often define triggering events with a high degree of detail. These events may need to be characterized as a terrorist attack or act of war by authorities. In some cases, access to the venue needs to be officially cut off by police.

It follows that an attack by a 64-year old ex-accountant who shoots hundreds of people for no apparent reason — as was the case in the Mandalay Bay tragedy — isn’t likely to align with a typical policy trigger.

But insurers say they are trying to adapt to the evolving realities of both mass shootings and terrorism to meet the new needs expressed by clients.

“The active shooting coverage is drawing much interest in the U.S. market right now. In Europe, clients are increasingly inquiring about loss of attraction,” said Chris Parker, head of terrorism and political violence, Beazley.

“What we are doing at the moment is to try and cross these two kinds of products, so that a client can get coverage for the loss of attraction resulting from an active shooting event.”

Loss-of-attraction policies cover revenue loss derived from catastrophic events, and underwriters already offer alternatives that provide coverage, even when no property damage is involved.

To establish the reach of such a policy, buyers can define a trigger radius — a physical area defined in the policy. If a catastrophic event takes place within this radius, coverage will be triggered. This practice is sometimes called “cat in a box.”

Some products specify locations that, if hit by a catastrophic event, will result in lost revenue for the insured. For resorts or large entertainment complexes, for example, attacks on nearby airports could cause significant loss of revenue and could be covered by NDBI insurance.

Measuring losses is a challenge, and underwriters may demand steep retention levels. According to Parker, excess coverage may kick in after a 20 percent to 25 percent revenue drop.

Insurers will also want proof that the drop is related to the catastrophic event rather than economic downturn, seasonal variances or other factors.

“Capacity is very large for direct acts of terrorism but lower for indirect terrorism and violent acts because the exposure is far greater,” said Joey Sylvester, national director of operations & planning, Public Sector, Gallagher.

“Commercial businesses, public entities, religious and nonprofit organizations have various needs for this type of coverage, and the appetite is certainly trending upward.”

It is difficult to foresee which events will cause business disruption. As a result, according to Nusslein, companies generally prefer to purchase all-risk NDBI covers rather than named-perils coverage.

“The main reason is that, if they have coverage for four potential NDBI events and a fifth event occurs, the fifth event is not covered,” he said. “Insurers, new to NDBI covers, still prefer named-perils covers over all-risk cover.”

Current geopolitical tensions are also fueling buyers’ demands.

“Many companies want nuclear, biochemical, chemical and radiological exclusions removed from terrorism NDBI covers. While this is more difficult for insurers, it is not impossible,” Nusslein said.

“War risk NDBI cover is becoming more sought after due to political tensions between the U.S. and North Korea.”

“Many companies want nuclear, biochemical, chemical and radiological exclusions removed from terrorism NDBI covers. While this is more difficult for insurers, it is not impossible.” — Bob Nusslein, head of Innovative Risk Solutions Americas, Swiss Re CS

Natural catastrophes still constitute the largest share of perils underlying NDBI products.  Parametric indexes are increasingly employed to provide uncontroversial triggers to policies, said Duncan Ellis, U.S. property practice leader, Marsh.

These indexes range from rainfall levels and wind speed to the measured intensity of earthquakes. Interest in this kind of NDBI coverage expanded after the recent hurricane season.

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“The benefit of these products is that you do not have to go through the settlement process, which clients hate,” Ellis said.

NDBI policies are often bespoke, which is more common for very large insurance buyers.

“Usually, the market offers bespoke coverages for individual industries or clients, with very significant deductibles,” said Tim Cracknell, partner,  JLT Specialty.

NDBI cover can also help transfer regulatory and product recall risks. The life science sector is expressing interest in this kind of solution for cases where a supplier goes bankrupt or is shut down by a regulator, or a medication needs to be recalled due to perceived flaws in the manufacturing process.

Experts say that concerns still to be addressed are NDBI losses caused by cyber attacks and pandemics.

Capacity is an ongoing concern. According to Swiss Re CS, $50 million to $100 million, or even more, can be achieved through foundation capacity provided by a lead insurer, with syndicated capacity to other insurers and reinsurers, depending on the risk. &

Rodrigo Amaral is a freelance writer specializing in Latin American and European risk management and insurance markets. He can be reached at [email protected]