Only in that it spreads the same amount among multiple school districts in the form of future payments--plus a bit of overhead, etc.
If insurance companies could arbitrarily jack up rates without losing customers, they wouldn't wait for a settlement for a reason to do so. They'd jack up the rates and pocket the extra profit. Else the customer would move on to the next insurance company - supply and demand, market forces, the invisible fapping hand of capitalism, and all that.
So it's back to the districts/departments bad behavior. There's no reason this has to work any differently than with any other kind of insurance. You have no accidents or tickets on your record, you're going to have lower car insurance rates than a chronic speeder with half a dozen DUI's under her belt. You're a school administrator or a police chief that doesn't have his head up his ass, you have low insurance rates. You're an incompetent racist authoritarian - high insurance rates. Stick, carrot, and all that.