Hello, Glynis and welcome.
Thank you very much for your patience, due to your question not being answered earlier. Different experts are online at various times, and I recently logged in and read your question.
I definitely think you (and his parents) have a reason to be concerned and need to follow up with this, more in depth. Ask if the school has any cameras in the classrooms, corridors, and/or outside in the playground, etc., and what measures are being taken to watch your grandson and the other children, regarding this behavior. I don't doubt that something is going on, after reading your description of what your grandson has said and demonstrated with his teddy bears. He didn't make this up--he's too young; it has to have come from a real life experience.
I'm glad that you mentioned this situation began after the loss of his other nana (my condolences), because the grief he experienced could have been transferred into this kind of behavior.
It might be a good idea to arrange for him to speak with a school psychologist (if they have one) or a private child psychologist who will know the right questions to ask and get more information leading to the main cause of this behavior and then it can be resolved.
I hope all goes well with your grandson.
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