"Economies of scale allow us to save money and improve coverage by purchasing property insurance as a system," said board member Aubrey Patterson.
The eight universities' buildings and their contents - valued at about $7 billion - are now "woefully underinsured," according to a consultant who did a study for the board.
Many buildings don't have any insurance to pay for damages from wind storms, fires or other disasters. The high costs of insurance premiums and budget constraints have discouraged universities from getting more coverage.
Mississippi State University and the University of Mississippi are the most exposed. The state's two largest schools are "very low in the amount of insurance they carried on their buildings," said Cliff Tucker, the board's director of insurance.
With a directive from the state Legislature, universities will now move toward insuring all properties.
"I really think we owe it to the citizens of this state to do the best we can to insure this property. If we have a big casualty out there, we're going to be in a world of hurt," said board member Alan Perry.
By pooling together to buy property insurance, the eight universities can go from covering $2.5 billion worth of properties to fully protecting the campuses from losses - and at a cheaper cost than the current way. Each university had been negotiating its own property insurance coverage and rates.
"A number of enhancements have been made to the current policies that just did not exist," said Mike Honeycutt, one of the board's insurance brokers.
The state Board of Institutions of Higher Learning voted Thursday to select AIG (American International Group) as the universities' property insurance carrier if approved by the state insurance commissioner.
AIG submitted the lowest and best proposal with a $3 million bid, Tucker said. That's less than the $6 million in annual premiums universities would be paying if they had to cover more buildings with the separate policies and rates currently in place.
As the new insurance plan protects more campus buildings, coverage will also be added for a variety of perils, such as damage to computers hit by viruses, the costs related to pandemic-disease outbreaks and the loss of tuition when students are kept from enrolling.
The new plan also improves the way historic campus buildings are valued for universities to be reimbursed if damaged or destroyed.
"Despite these very dramatic and significant increases in coverage, the premium ... is actually going down," insurance broker Mark Good told the board.
While the new property insurance plan is better than the current approach, universities now underinsured will be forced to spend more money to have more coverage. To ease the costs of this, the board is allowing them to gradually move toward having all buildings insured in a four-year period.
"The goal is 100 percent, and it's not only because the Legislature says it but I think it's prudent," Perry said.
Tucker said he expects five universities to be totally insured the first year.
Mississippi University for Women is well on its way to full coverage. Of the $370 million value set for MUW buildings and contents, $262 million is insured, according to an IHL board report.
MSU is deeply underinsured. Of its nearly $2 billion in property/content value, only $161 million is insured.