Higher Education and Insurance Policies

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Like other policyholders, harsh insurance market trends, compounded by cybersecurity risks, climate change and COVID-19, have hit higher education policyholders, resulting in reduced or limited coverage for higher premiums. These conditions – reduced coverage and higher premiums – are symptoms of a “tough” insurance market. (A hard market is caused by a mismatch between policyholders’ growing demand for coverage and insurers’ diminishing risk appetite.) But policyholders in higher education face unique risks that exacerbate prevailing market conditions, including:

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

  • fraternity and sorority hazing;

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

  • open or concealed carry laws and active shooter protocols;

  • college admissions scandalsfor example., Operation Varsity Blues);

  • student protests and law enforcement responses; and

  • a publication-deer environment.

In addition to unique risk types, the nature of these risks amplifies liability risks. For example, the confluence of latency periods for certain claims, such as traumatic brain injury, with resuscitation statutes for sexual abuse claims has expanded the temporal scope of tort liability for colleges and universities. In response, most higher education insurers have capped limits for both types of claims.

And the longevity of potential claims isn’t the only expansion of exposure experienced by colleges and universities. The same goes for the magnitude of these claims. In his 2022 Large Loss ReportUnited Educators (UE), a reciprocal risk retention group serving K-12 schools, colleges and universities, found that the number of awards or settlements of at least $250,000 made public has increased year by year.

For example, in 2020, the University of California, San Francisco confirmed that it paid a $1.14 million ransom to the criminals behind the Netwalker cyberattack on its medical school in exchange for a tool to unlock encrypted data. The hackers’ initial request was for $3 million, which the school negotiated.

And among the EU statistics for 2021 is an $852 million settlement that the University of Southern California agreed to pay more than 700 women who accused George Tyndall – the longtime campus gynecologist from the university – of sexual abuse. Before that, USC had paid $215 million to settle a class action lawsuit representing about 18,000 Tyndall patients. The total settlement of $1.1 billion would be the largest sexual abuse payout in higher education history.

While the UCSF ransom payment and USC settlement represent extremes, they are by no means isolated data points on the spectrum of higher education settlement payments/attributions. High liability losses are on the rise and there is no reason to expect this trend to reverse.

New to the list of risks facing higher education policyholders are the potential implications of recent Supreme Court rulings, including New York State Rifle & Pistol Ass’n Inc. vs. Bruenthat the Second Amendment includes the right to carry a handgun outside the home for self-defense, and Dobbs v. Jackson Women’s Health Org. who reversed half a century of abortion rights. Although it is too early to predict the full impact that either case will have on higher education, the changing legal landscape, at a minimum, is generating uncertainty from the perspective of risk management.

Colleges and universities would benefit from consulting an insurance attorney to weigh their risks and audit their operations to prepare for the legal and coverage issues that are sure to follow. After all, even educators need a back-to-school update!

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

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