ARMS is the not-for-profit, tax-exempt, member-owned, member-governed self-funded risk management alternative Alabama boards of education have available for funding selected liability risks to which they are exposed.
The Alabama Association of School Boards (AASB) has since 1976 provided its members a source of liability coverage. From 1976 until 1985, AASB conducted research to identify the most appropriate commercial liability insurance options for boards. Such research led to cost reducing competition among selected insurers. When the commercial insurance industry abandoned boards of education in the liability insurance crisis of the 1980s, AASB established self-funded liability funds for its members. The member-owned, member-governed self-funded trust now known as Alabama Risk Management for Schools (ARMS) has offered Alabama boards of education a funding alternative for general liability/errors and omissions liability coverage since 1985 and automobile liability since 1986. The following paragraphs describe ARMS by its characteristics of cost, coverage, claims, and consistency.
Commercial insurance companies spend 25-35% of their premiums for administrative costs such as commissions, taxes, operating expenses, and profits. ARMS, like its member boards, is tax exempt and not-for-profit. ARMS pays no commissions and keeps its operating expenses very low. ARMS total administrative costs historically have been 10% or less. Obviously, ARMS expenses are much lower than those of commercial insurance companies. This administrative cost advantage means lower cost coverage. Investment income earned on funds held for the payment of current and future claims is used to further reduce cost of ARMS participation.
ARMS liability coverage is specifically tailored for the risk exposures of Alabama boards of education. Taking into account the nuances of immunity defenses, court decisions, and state statutes that apply only to boards of education, ARMS coverage fits the risk exposures of Alabama boards in ways no commercial insurance does. One example of such unique coverage is the defense of employee claims arising from on the job injuries. Since Alabama boards do not purchase workers’ compensation insurance and since commercial liability insurance excludes such claims, ARMS provides this much needed coverage.
ARMS has defended thousands of liability claims on behalf of its members. No commercial insurer has a fraction of the Alabama specific claims experience of ARMS. Based upon this experience and the specialization of ARMS defense lawyers, ARMS provides its members the best chance of successfully defending liability claims.
AASB and ARMS for over a thirty-five years have provided liability coverage for Alabama boards of education. Since 1985, ARMS participation has consistently meant stable, cost-efficient liability coverage without worry of commercial insurer type abandonment.