You’ve spent years operating a good preschool; safety is a primary concern for you; the economy is tight and you need to save money everywhere you can; enrollment is not what it was 18 months ago; here comes the insurance agent delivering the news that your premium is going up, again. WHY? You haven’t made any claims; it doesn’t make any sense.

The answer you may not be getting from your agent is that rates are going up for everyone in your state because the insurance company paid out big claims for other preschools in your state. Is that fair? Why are you paying for someone else’s claims? Now, before you get your renewal quotation is the time to think about this possibility.

Thousands of years ago, insurance was not used in common daily life. Instead, neighbors stepped in to help one another when disaster struck. If a fire burned down a neighbor’s barn, everyone pitched in with the materials and tools they had to hand plus their labor. If one neighbor did not help that was remembered by the others if the non-helper found themselves in a bad position. With everyone’s assistance a new barn was raised. If a farmer fell sick during planting or harvesting time, the other neighboring farmers filled in to assist the family knowing that when the shoe was on the other foot their neighbors would be there to help their own family.

Today, insurance works on the same principles but it works with dollars instead of shared labor and materials. Essentially, when you purchase

insurance for your preschool, your premium dollars go into a fund with all the other preschool premium dollars in your state. Out of that fund the insurer pays the claims presented by the preschools, the agent’s commission, the insurers expenses and then expects to retain an underwriting profit.

If the preschools in a particular state have a run of big claims in a particular year (or series of years) the insurer realizes they aren’t getting enough money so they raise the rates for all preschools. Admittedly, the schools that had the claims will get a larger increase than the schools without claims, but everybody will see rates go up.

I can relate it back to my neighboring farmers analogy like this: when we help our neighbor raise a new barn we have to work more. We have to work more because the time we spend on the neighbor’s farm is time we took away from our own farm. The work on our farm isn’t going away so we must work more hours to get all the work done.

In our modern economy, instead of neighbors pooling resources with our labor we are pooling resources with our dollars. So we spend more dollars to raise our neighbor’s barn. The mechanism of insurance is traced back to the 2nd century BC but the financial aspect, or dollar exchange did not arise as a common practice until the 1700’s.

So, would you rather maintain the modern day approach or would you like to return to the old days of helping your neighbor raise a barn? Vote on our website: www.blockinsurance.net