Gov. Sarah Huckabee Sanders tours tornado-damaged Wynne High School on April 2, 2023. (Randall Lee/Arkansas Governor’s Office)

State lawmakers will wait until the upcoming fiscal session to decide whether or not to follow a consulting firm’s recommendation that Arkansas start its own insurance company for school properties, legislators said Wednesday. 

Roberts Lee, president of Meadors, Adams & Lee Insurance Inc., urged lawmakers to make a decision soon during its presentation to the Arkansas Legislative Council’s executive subcommittee. 


“We think the greatest risk is not to take action now,” Lee said, noting the costs of rising premiums and the money that could be coming to the state instead of into private insurance companies’ pockets.

The firm’s recommendations came after months of study, which began in September, to find a solution to rapidly rising property insurance premiums for public school districts and higher education institutions.


Most school districts in the state are insured either through a program managed by the Arkansas School Boards Association or a separate program managed by the state Insurance Department. The consultant’s proposal is to instead create a special purpose “captive,” which would be organized and administered by the state and named Diamond State Insurance Company. In a captive, the insured party owns the entity providing the insurance.

“We all know that there are three programs in place and we know they’re competing against each other for similar limits of insurance,” Lee said. “When you buy insurance like a consumer versus buying insurance like an insurance company it’s very, very difficult to control your costs.”


Lee said a look at the state’s 237 public school districts shows a vast difference in rates being paid from one district to another. The captive would level the playing field by charging each district the same premium per $100 of insurance coverage.

The next step, Lee told lawmakers, was to give the go-ahead for a six-month “proof of concept” phase. An implementation team would need to be selected which would then select a board of directors made up of members including a risk manager, investment advisor and reinsurance broker.


If work begins in April, the concept could be operational by October, Lee said.

“We do believe we have found the solution that you asked us for,” Lee said.


School insurance premiums are increasing across the state and nation. A report by Education Week blames climate change for causing more frequent natural disasters.

The governor’s office last summer said the state’s school districts would see an average increase of 130% in insurance premiums over the 2023-24 school year. In July, Gov. Sarah Sanders authorized the use of state funds to cover 30% of the increase. Lawmakers then approved $10.8 million in funds to be split among school districts to make up for the cost spike.


Sen. Jonathan Dismang (R-Beebe) said Wednesday that the current situation is “clearly not sustainable” and urged fellow lawmakers to take action. 

We have the opportunity because of what we’ve been able to create in reserves and trust fund balances, to be able to create long term savings for the state, which I think will reward our taxpayers with potential decreases in costs,” Dismang said. The strongest lobby the state government has is inertia, he said. 

Legislators took no action on the proposal but will revisit it during the fiscal session, which begins April 10.