State of the Market
What is a perfect storm? It’s a particularly violent situation arising from a rare combination of adverse factors. That definition best describes the state of the liability market for education risks. When we add a whole new host of exposures presented by the COVID-19 pandemic and national civil unrest to the existing adverse liability factors felt by educational institutions, we have a perfect storm.
We experienced increased market fallout from the busy July 1st education renewal season this year and can report that the liability marketplace continues to constrict. Excess capacity is difficult to find, costly to purchase and key coverages such as Sexual Abuse, Athletic Head Injury and Communicable Disease are not readily available.
The steep downturn we witnessed in July, evidenced by the further tightening of underwriting requirements, reduced capacity and constricted coverage, was more severe than the progressive monthly market tightening we’ve been experiencing since the year began.
New & Emerging Risks
The risk factors identified by casualty insurers that are driving the capacity crisis over the last six months are:
- Social inflation/nuclear verdicts
- 100+ class action law suits for Athletic Traumatic Brain Injury filed against the NCAA
- Out of control Sexual Abuse Molestation losses and verdicts (with more potential losses bubbling up from the newly-passed states’ legislation removing the statute of limitations for sexual abuse offenses)
- Ongoing school shootings
- Cyber bullying
These risks and their respective loss frequencies continue to climb and remain front and center for the liability markets. The perfect storm scenario is unfolding as these not-so-new-risks are coupled with the physical, social and environmental impact presented by the pandemic as well as national civil and social unrest.
What can happen to our education clients and prospects given these new circumstances? Emerging pandemic and social risk, exposures and losses include:
- Disease Transmission – assuming there will be school re-openings, there are strict liability laws regarding Bodily Injury from disease transmission on campus and growing concerns for viral transmissions and major viral outbreaks on campus
- Strict Liability Statutes: 1) Landowner Liability 2) Negligence Per Se 3) Affirmative or Gratuitous Undertaking
- Violent Protests on Campus - civil unrest may likely find its way to college campuses, and the risk of violent protests on campus is inevitable if campuses re-open
- Failure to Properly Educate - distance learning presents challenges for schools to deliver quality education; class action suits demanding tuition reimbursement are now abundant, alleging lack of quality education
- Child Abuse at Home – Relating to child welfare and well-being, teachers were the single largest reporters of children abused in their homes; this layer of child well-being is absent from the distance learning platform
- Mental Health - student depression from social isolation with lasting social and psychological issues is manifesting from pandemic stay-at-home orders
How to Advise Clients
How do we advise our educational clients and prospects to position them with the best opportunity to secure needed coverage and capacity?
Clients and prospects who are making informed decisions about how best to protect students, staff and faculty should know that underwriters will need to hear their risk management story. Underwriters will ask how their decisions address timely headline exposures and how they exceed industry guidelines for prevention, mitigation and compliance. Clients will need to articulate and showcase to the insurance underwriters their plans for addressing, treating and managing these risks. Those clients that are prepared and can share their differentiating stories are much better positioned to receive the consideration, coverage and capacity that is still available in the market.
While news about COVID-19 evolves daily, we are focused on supporting our clients and prospects in their prevention, mitigation and compliance endeavors as they are faced with critical decisions about how to protect students, staff and faculty.
We’ve gathered some of the best COVID-19 and social unrest resources for education-specific risks and exposure to give you a full picture of what’s going on.
United Educators (UE) has fielded many calls from K-12 and higher education members about when and whether to resume on-campus operations. From these conversations and additional research, they have developed a guide specifically aimed at helping manage risks associated with returning to campus.
- Johns Hopkins Self-Assessment for Higher Education Re-Opening
- California OSHA Guidance on COVID-19 Re-Opening
- The Chronicle of Higher Education – The Coming Campus Protests