Fooling politicians is easy; fooling actuaries is hard

Updated
 
The scene outside of Sandy Hook Elementary School in Newtown, Conn., in December.
The scene outside of Sandy Hook Elementary School in Newtown, Conn., in December.
Associated Press

Politicians and pundits care about talking points. Actuaries care about data. (Thanks to reader C.R. for the heads-up.)

As more schools consider arming their employees, some districts are encountering a daunting economic hurdle: insurance carriers threatening to raise their premiums or revoke coverage entirely.

During legislative sessions this year, seven states enacted laws permitting teachers or administrators to carry guns in schools. Three of the measures – in Kansas, South Dakota and Tennessee – took effect last week.

But already, EMC Insurance Companies, the liability insurance provider for about 90 percent of Kansas school districts, has sent a letter to its agents saying that schools permitting employees to carry concealed handguns would be declined coverage.

The insurer’s letter explained to officials in Kansas, “We are making this underwriting decision simply to protect the financial security of our company.”

And this, of course, makes quite a bit of sense. In the wake of the massacre at Sandy Hook Elementary, far-right policymakers in a variety of states decided the appropriate response was bringing in more loaded firearms into schools, to be kept around children. This is precisely what the NRA recommended – schools will be safer, the group insisted, with armed school personnel – and policymakers acted accordingly.

But insurance companies don’t much care about political rhetoric, and have fiduciary responsibilities to consider. And wouldn’t you know it, the actuaries ran the numbers and decided insuring schools that may include gun-toting teachers is not a wise investment.

Remember, it’s not like EMC Insurance was lobbied to make this decision by the White House, Michael Bloomberg, or Gabrielle Giffords. Rather, the company made a straightforward business decision based on the same policies EMC Insurance has always maintained.

“We’ve been writing school business for almost 40 years, and one of the underwriting guidelines we follow for schools is that any on-site armed security should be provided by uniformed, qualified law enforcement officers,” Mick Lovell, EMC’s vice president for business development, told the Des Moines Register. “Our guidelines have not recently changed.”

Kansas schools aren’t the only ones affected by insurers’ concerns.

From the NYT article:

In northeast Indiana, Douglas A. Harp, the sheriff of Noble County, offered to deputize teachers to carry handguns in their classrooms less than a week after 26 children and educators were killed in a school shooting in Newtown, Conn. A community member donated $27,000 in firearms to the effort. School officials from three districts seemed ready to sign off. But the plan fell apart after an insurer refused to provide workers’ compensation to schools with gun-carrying staff members.

The Oregon School Boards Association, which manages liability coverage for all but a handful of the state’s school districts, recently announced a new pricing structure that would make districts pay an extra $2,500 annual premium for every staff member carrying a weapon on the job.

Scott Whitman, an administrator at the Jackson County school district in southern Oregon, where a committee is looking at arming school staff members next year, said costs would be a factor in the decision. With 10 buildings, the expense of arming and training more than one staff member at each school would easily exceed $50,000 a year.

As other states consider related policies, plenty of insurers aren’t looking forward to making these decisions.

The political impact is real. Officials who originally thought the question came down to, “Do we listen to the NRA or not?” are quickly realizing that the better question is, “Can we afford the higher premiums for a dangerous policy or not?”

Explore:

Fooling politicians is easy; fooling actuaries is hard

Updated