Bad Risk in Schools

In 1967, the Kemper Insurance Group outbid nine other companies for the policy to cover Indianapolis' 123 schools against fire, vandalism and other risks. The school board paid its $126,000 annual premium and had only one major claim--$101,000 for windstorm damage. Last week the board was searching for new coverage. Kemper announced that after the Indianapolis policy expires on March 1 it will not be renewed.

Company spokesmen contended that Kemper had no choice. To reduce its own risks, the company had passed on 75% of the $576 million policy to a pool of 15 other insurance firms. Because of growing vandalism in U.S. schools, which last year suffered $200 million in equipment damage, the pool decided against renewing the policy, even though Indianapolis itself has had little vandalism.

Schools in New Brunswick, N.J., hard hit by vandalism and racial turmoil, were forced to close for a day last October when Chicago's Continental Casualty Co. refused to renew coverage. Elsewhere, premium rates are rapidly inflating. Atlanta's school fire insurance costs rose from $60,000 to $200,000 last year. Nolan E. Allen, business manager of the Indianapolis school system, wonders about the reasoning behind insurance. "A company says that it wants to take care of you when there is a risk," he muses. "But when you do have a risk, it says goodbye."

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