House approves plan to form captive insurer for school, higher-education and state property after extended floor explanation

The Arkansas House passed House Bill 18-21, authorizing creation of a captive insurance program to provide property insurance for K-12 public and charter schools, public institutions of higher education and state-owned property. Representative Wardlaw, sponsor of the legislation, spent substantial floor time laying out the rationale, mechanics and oversight.

"The purpose to create this new program is to create a stable, affordable, and self sustaining program for provision of property insurance to all K through 12 public and charter schools, all public institutions of higher ed, and all state owned properties administered under 1 entity," Wardlaw said on the floor.

Why the change: House leaders and outside consultants told lawmakers that premiums for school and state property had been rising sharply; earlier emergency transfers and subsidies were used to blunt increases. Wardlaw said consultants initially recommended moving roughly $300 million into a captive, but lawmakers sought a smaller initial capital plan: "We didn't like that recommendation because that amount of money is very large, and we thought we could do it better than that," Wardlaw said, explaining the bill's $135 million design.

Key features described on the floor

- Coverage scope: property coverage for public K-12 schools, public higher-education institutions and state-owned buildings administered under a single program rather than three separate programs. - Participation rule: entities that accept state facility funding must participate in the captive; districts that fund their buildings without state assistance may opt out. - Deductibles and deferred-maintenance provisions: the bill allows deductible options (for example percentage-based roof deductibles) and adds language intended to encourage regular maintenance and to limit claims tied to deferred upkeep. Wardlaw said the rules will require claims be filed within a year of an event to discourage old deferred- maintenance claims. - Oversight and rulemaking: the Department of Transformation and Shared Services (DTSS) secretary is given rulemaking authority; the program will be overseen through existing legislative subcommittees and is intended to mirror prior oversight structures such as those for EBD.

Questions and clarifications on the floor included whether vendors had already been contracted to stand up the program (Wardlaw said consulting contracts were in place for setup but no binding insurance contracts yet) and when schools would see the new coverage available (the captive was described as targeted to be on the market by Dec. 1, 2025, with renewals in July 2025 remaining on the current broker structure).

Why it matters: Sponsors argued the captive will reduce overall net premium cost, keep investment returns inside the state (rather than with out-of-state insurers) and provide a more stable market for school coverage. Lawmakers pressed for safeguards so that institutions choosing nonstandard coverage must acknowledge added local risk in writing, a point Wardlaw emphasized to limit taxpayer exposure.

Vote: The House passed House Bill 18-21 with the emergency clause by roll-call vote.

Votes and next steps: The measure passed on the floor and includes an emergency clause and a timeline for rule development; operational details and the broker/manager selections will proceed under rules and legislative oversight before coverage begins.

Sources: Floor statements by Representative Gibson Wardlaw (sponsor) and subsequent recorded vote in the House transcript.