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Introduction

In the September outlook on education, law firm Fisher Phillips identified the impact of the SCOTUS ruling on Affirmative Action, Artificial Intelligence, Immigration Compliance, and changes to Title IX among the most compelling issues affecting educational institutions as they kicked off another academic year.¹

Add this to continued challenges around enrollment, talent recruitment, data security, sexual misconduct, and student mental health, and it should come as no surprise that school administrators who drive the strategic risk management process at their institutions have their hands full in the ever-evolving landscape of education.²

Compounding these considerations, the insurance market for school risks is undergoing significant changes and challenges. Insurance carriers know the range of risks educational institutions face that require more tailored and specialized insurance.

At the same time, insurance carriers must consider the cost pressures that impact insurance affordability, partly driven by the increased frequency and severity of natural disasters and high-profile incidents of bullying and abuse. Balancing the need for adequate coverage with the constraints of available funding is a delicate challenge, leading schools to explore more risk management strategies and loss prevention measures to control those costs.

Insurance carriers know the range of risks educational institutions face.

Market Outlook

Property

• Rising property values, cost of materials, and lead times are major marketplace components. Natural catastrophic losses continue to impact values and contribute to difficulties in coverage lines.
• The reinsurance market may indicate a decline in total capital; economic solvency is improving.³

Natural catastrophic losses continue to impact values and contribute to difficulties in coverage lines.

GENERAL PRICING ESTIMATES

Non-CAT exposed with favorable loss history	15% to 30% increases
CAT exposed with favorable loss history	20% to 35% increases
Property with unfavorable loss history and/or a lack of demonstrated commitment to risk improvement (unresolved recs, pattern of same issues, etc.)	15%+ increases for non-CAT 20% to 60%+ increases for CAT exposed accounts and higher depending on frequency/severity of losses

Casualty

General Liability

• There have been subtle increases in pricing for the casualty market, even though primary general liability rates have remained stable for risks with minimal losses.
• Insurers seek more information on past losses and the steps to protect against recurring similar losses.
• Depending on an organization’s risk profile and loss history, commercial general liability markets will likely experience increased premiums and stricter terms and conditions.

Sexual Abuse and Molestation

• Insurers providing general liability coverage tailored to institutions often include a distinct insuring agreement with designated limits for sexual abuse and molestation. A few carriers modify or limit coverage terms and incorporate sub-limits within the excess policy-provided limit. Underwriters are imposing rigorous standards, demanding stringent controls within institutions.
• Leadership’s commitment to making a positive impact to prevent sexual abuse in schools is key. Carriers are willing to partner with and provide solutions for preventative measures.
• Insurers who still offer this coverage now necessitate that institutions take more extraordinary precautions to guarantee they are protecting against sexual misconduct, such as introducing rigorous policies and protocols, delivering training, upholding enforcement across all institution levels, and extending the requirement for background checks to include volunteers and outside vendors who come into contact with minors.⁴

Reduced liability limits are available as carriers look to rebalance capacity and mitigate potential risks.

Excess Liability

• Reduced liability limits are available as carriers look to rebalance capacity and mitigate potential risks. This facilitates the need to coordinate coverage with multiple insurance carriers to attain the desired coverage limits, often increasing costs.

Educators’ Legal Liability

• Educators’ legal liability (ELL) policies generally offer coverage for the institution and its trustees, directors, and, officers. There is also an option for institutions to provide coverage for employees, volunteers, and, in some cases, students or interns performing their duties or obligations as part of the institution.
• Depending on the policy’s conditions, coverage can be extended to include coverage for employment practices liability (EPL), which offers protection against potential claims related to discrimination, hiring procedures, retaliation, workplace sexual harassment, and tenure denials in addition to educators’ professional liability to cover for allegations of professional errors by educators, such as failure to educate, failure to counsel, or failure to promote.⁵

GENERAL PRICING ESTIMATES

General Liability	Up 5% to 25%
Educators’ legal liability with favorable loss history	Up 5% to 15% Up 10% to 25% with poor loss history
Umbrella & Excess Liability – middle market	Up 10% to 25%+
Umbrella & Excess Liability – risk management and other complex/hazardous exposures	Up 25% to 150%

Auto

• Commercial auto insurance continues to increase in complexity. Standalone nonowned auto coverage also remains a challenge. However, when combining the coverage with commercial package policies, coverage can sometimes be attained within a more reachable market.

Workers’ Compensation

• Workers’ compensation rates across most regions remain unchanged or have decreased. However, other regions are seeing slight increases in premiums, possibly due to substantial wage and job growth in the U.S. labor market.⁶

GENERAL PRICING ESTIMATES

Workers’ Compensation	Up 5% to 10%
Auto	Up 10% to 30% Up 30%+ if large fleet and/or poor loss history

Cyber

• In Q2 2023, the average cyber premium increased by 3.6%.⁷ This is potentially an indication of stabilization in the coverage line.
• Underwriters have continued strengthening the subjectivities for enhanced security protocols and significant underwriting detail regarding cyber practices.

Major Claims in The Sector

Negligence
A janitor was exposed to asbestos, resulting in mesothelioma and death. His family sued. Jurors awarded $75 million in punitive damages and $32 million in compensatory damages.⁸

Liability
The plaintiff was a special education student. Another special education student locked them in the bathroom together and attempted to assault the plaintiff. Employees were unable to get into the bathroom for a few minutes. The plaintiff suffered from PTSD and received an offer of settlement for $200,000. Jurors awarded $2.35 million.⁸