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Thursday, May 16, 2013
OKLAHOMA CITY – Effective immediately, school districts entering into inter-local insurance agreements will have the additional support of required financial transparency of the entities they are joining. Senate Bill 692, supported by Oklahoma Insurance Commissioner John D. Doak and recently signed by Gov. Mary Fallin, requires inter-local insurance pools to file audited financial statements with the Oklahoma Insurance Department (OID).
“Increasing transparency in inter-local insurance agreements will help school districts make better informed decisions before they join these pools,” said Doak. “By making certain that these insurance pools have the assets to cover the amounts they insure, schools will be better protect! ed and be able to prevent one catastrophe from financially crippling several schools at one time.”
Local school districts often enter into inter-local cooperative agreements to pool their liability and property risks. The school districts are limited when making those decisions if financial statements for the self-insured pools have not been made available. SB 692, authored by Sen. Bryce Marlatt, R-Woodward and Rep. Dan Kirby, R–Tulsa, will require the financial statements to be filed with OID, thus promoting transparency and serving to help school districts understand what they are agreeing to join.
“School districts need to better understand what they are undertaking, how to evaluate the product and what risks are involved,” continued Doak. “School boards should have the inf! ormation they need to make decisions on insurance well before the required time, so they have the confidence to protect their district. I applaud Gov. Fallin for signing this bill into law.”
Statewide leaders are also showing support for the new law.
“It is important to note that before passage of SB 692, these arrangements were not required to report to any regulatory authority or prepare financial statements according to generally accepted accounting principles,” said Oklahoma State Auditor and Inspector Gary Jones. “I realize that school districts operate within tight budgets. My concern is that our schools are safeguarded to ensure that their insurance is financially sound and will be able to pay its claims when needed. I urge school districts to use due diligence as they are making decisions about purchasing insu! rance to cover their district assets.”
“Since these pools share the financial risk of more than one school district, one disaster could cost tens of millions of dollars,” said Dan Ramsey, President/CEO at Independent Insurance Agents of Oklahoma. “Requiring greater transparency through financial reporting will go a long ways to ensure that these school districts are legitimately covered.”
About the Oklahoma Insurance Department
The Oklahoma Insurance Department, an agency of the State of Oklahoma, is responsible for the education and protection of the insurance-buying public and for oversight of the insurance industry in the state.
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