Back to School Blues: Scary Shows That Affect Higher Education

Like other policyholders, tight insurance markets, exacerbated by the threat of cybersecurity, climate change, and COVID-19, have affected higher education policyholders, resulting in reduced premiums or less coverage. These conditions – reduced costs and higher premiums – are signs of a “difficult” insurance market. (A tight market is caused by a mismatch between policyholders’ need for coverage and the insurance’s declining risk.) But higher education policyholders face risks that amplify market trends, including:

  • Title IX claims related to discrimination, sexual harassment or assault, or harassment;

  • heart disease and illness;

  • sports injuries or illnesses, including traumatic brain injuries and heat-related illnesses;

  • open or closed rules and firing procedures;

  • college admissions challenges (for example., Operation Varsity Blues);

  • student protests and legal responses; and

  • post-Roe the environment.

Apart from the specific types of threats, the nature of these threats increases the exposure to problems. For example, the combination of time delays for other reasons, such as traumatic brain injury, and laws relaxing sexual harassment claims have increased the long-term rate of problems at colleges and universities. In response, most higher education insurance policies have limits for both reasons.

And the length of that claim isn’t just about increasing the exposure that colleges and universities face. So is the scope of these claims. In his own 2022 Great Loss ReportUnited Educators (UE), an advocacy group that works in K-12 schools, colleges, and universities, found that the number of publicly announced or established awards of at least $250,000 has increased year over year.

For example, in 2020, the University of California, San Francisco confirmed that it had paid $1.14 million to criminals involved in the Netwalker cyber-attack on its School of Medicine in exchange for a tool to unlock encrypted information. The plaintiffs’ initial demand was $3 million, which the school negotiated to settle.

And among UE’s 2021 figures is the $852 million the University of Southern California agreed to pay to more than 700 women who accused George Tyndall — the college’s longtime medical examiner — of sexual assault. Before that, USC had paid $215 million to settle a lawsuit involving about 18,000 Tyndall patients. The total fine of $1.1 billion is said to be the largest sexual harassment fund in the history of higher education.

Although UCSF’s ransom payments and USC’s establishment represent the extremes, they are not the only things paid for in higher education salaries/awards. High credit losses are on the rise, and there is no reason to expect this to change.

New to the list of threats facing higher education policyholders are the recent Supreme Court rulings, including New York State Rifle & Pistol Ass’n Inc. v. Bruenwhich held that the Second Amendment includes the right to carry a firearm outside the home for self-defense, and Dobbs v. Jackson Women’s Health Org. which violated abortion rights for half a century. Although it is too early to predict the full impact that will affect higher education, the changes in the law, little by little, bring uncertainty to risk management.

Colleges and universities can benefit from consulting with insurance consultants to review their claims and assess their performance in order to prepare for legal issues and audits. After all, even teachers need resumes for school!

Copyright © 2022, Hunton Andrews Kurth LLP. All rights reserved.National Law Review, Volume XII, Number 234