Many industries have been forced to navigate challenging markets this year, and educational institutions are no exception. Rate and premium increases, combined with reductions in limits and coverages, are issues that every school is faced with in 2020. On top of market conditions, these insureds also have to juggle federal mandates, the media (traditional and social), and ethical and legal issues surrounding the reopening of schools.
The insurance industry is always evolving, and minor changes on a yearly basis can lead to colossal losses. For those of us who have been in the industry for 15-20 years, minutiae matter. Selecting the right carrier is more than just presenting policy wording, but knowing how claims are eventually settled.
Take bullying/assault, for example. An executive lines policy can potentially deny claims based on bodily injury exclusionary wording, but you are still found in a tough spot because your package GL carrier is only providing defense and disclaiming indemnification coverage on other portions of the claim.
Or in the instance of Individual Education Plans (IEPs), does your policy consist of the correct defense sublimits? Schools have additional exposure when they are responsible for deeming when a child should be put onto a customized educational development path. For instance, not determining an autistic child’s need for an individual plan soon enough may eventually hinder their ability to succeed.
These are all cases to be considered and policies should be tailored accordingly. We are entering a time where the details are vital and collaboration with your wholesale broker is critical.
Ask the Right Questions
Management Liability lines have always been a tough placement for schools as opposed to other industries due to the overlap between Directors and Officers Liability, Educator’s Legal Liability, Employment Practices Liability, and Errors & Omissions exposures. You can cover a board for their fiduciary duty, but also need to cover the school employees.
Of these employees, are you looking to cover the teachers and their professional services? To what extent? Are you in need for individualized education program coverage? Do you need Sexual Abuse and Molestation coverage? But wait, can’t Educator’s Legal Liability and Sexual Abuse be on a package policy? “I have an endorsement!” - is this enough?
As if that list does not spark some curiosity, don’t forget that every single school is different. For-profit and not-for-profit school forms are available in the marketplace, and depending on the situation, that leniency of being able to choose which form best covers your client via a manuscript basis can come into play.
In the E&S marketplace, some carriers provide more robust coverage in certain states over others due to litigation history. Additionally, here are some other things to consider when building the right coverage: Is the school you’re evaluating a part of a Joint Powers Authority that runs off of a Memorandum of Coverage, or does it carry a standard primary insurance policy? How broad is your policy’s definition of insured? Does coverage extend to volunteers, students and independent contractors? Are all of these questions being asked?
There is an endless amount of information available on all of the topics in regards to appropriately insuring and procuring the risk management program for an educational institution. In today’s pandemic environment, however, we can start with honing in on discrimination, wage & hour, and the most obvious, health and safety issues.
Current and Potential Claims
With the increase of employees being either furloughed or even laid off, wrongful termination claims are seeing an obvious uptick, but so are claims relating to age discrimination and mistreatment due to race or ethnicity. This is affecting schools. School boards are having to manage expenses during the academic year more critically, and unfortunately for many school employees, payrolls have been cut and others have been laid off or furloughed.
Once the COVID pandemic subsides, the conversation of whether the right procedures are in place to appropriately bounce back and re-structure the organization arises. As changes are made to attain normalcy, decision makers must be aware of their susceptibility to discriminatory litigation, or a few losses can be detrimental to the institution’s balance sheet.
Wage and hour coverage juggles a fine line of appropriately tracking employees and compensating them fairly. It’s pretty easy to say “let’s continue this operation online.” However, how are the employees/teachers/independent contractors being tracked outside the few hours over video classroom conference? What Cyber risks are being accounted for? If wages are being cut, for what reasons and how is work being reallocated? How are they being justified? As any insured, an educational institution exploring the idea of shrinking overhead costs, but failing to tend to employee wage issues, could result in millions of dollars in defense and settlement costs.
Health and safety really ties into Breach of Fiduciary Duty, and whether the management of a company is doing their best to ensure the safety of their employees and clients. New hires or tenured employees may allege the insured’s management board knowingly put them in danger by increasing their exposure to Covid-19. Increasing employee contact with others (students or not), arguably could have been avoided in the first place. The number one exposure for the management of a company boils down to the trust between the employees/clients of a company and the contracts put in place.
How to Help Your Clients
So how can we help our customers navigate these choppy waters? For starters, build a comprehensive insurance package. RPS has exclusive products that address the concerns of educational institutions, with broad coverage and strong reputations for claims handling.
Our products have different rating requirements that provide a more consistent rating basis for educational institutions. For example, as opposed to the rest of the marketplace that is rating cyber liability off of revenues, our product rates off of student count, which is more appropriate for public, private and charter schools.
With the ongoing turbulence of COVID-19 and its indeterminable effect on the marketplace at this time, it is imperative to lean on your RPS wholesaler to inform you of the major updates and changes that could further protect your clients. Our #1 goal is to help you come through for your clients—it’s our passion.