As educational institutions renew their insurance programs, many in advance of the upcoming school year, they face rising prices, tighter terms and conditions and new exposures related to the COVID-19 pandemic.
Many educational institutions renew at July 1 and a smaller group at Oct. 1, sources say.
Insurers are moving to clarify and narrow policy language related to the pandemic, said John Stephens, president of property and casualty for Keenan & Associates, a unit of AssuredPartners Inc., in Los Angeles. “They’re getting very, very specific now,” he said.
Previously, insurers attempted to address such exposures through a pollution definition, but the words “pandemic” or “COVID” were not used, Mr. Stephens said. “Now, what we’re seeing is virtually every single policy or reinsurance contract specifically excludes communicable disease,” and some are specifically listing COVID-19, SARS and others.
Insurers also are scrutinizing educational institutions’ COVID-19 planning and response procedures, said John McLaughlin, senior managing director, higher education practice for Arthur J. Gallagher & Co. in Rolling Meadows, Illinois. “It’s become a fundamental part of the underwriting process,” he said, with a checklist of items and actions to be addressed. “How they’ll manage outbreaks, contact tracing. How will institutions respond?” he said.
The huge increase in online education has opened a new potential cyber exposure for educational institutions, according to John Klecha, president of Connecticut operations for USI Insurance Services Inc., in Meriden, Connecticut. A cyber event could restrict an institution’s ability to conduct online activities, he said, and essentially put an educational institution “out of business.”
The pandemic hit while the insurance market for educational institutions was already firming, said Mark Turkalo, Marsh LLC’s national education and public entity placement leader.
Mr. Turkalo said capacity had contracted “quite drastically,” since last year’s renewal with markets now offering limits of $5 million and $10 million where they previously offered $25 million. “Underwriters and carriers are very conservative in deploying capacity into this space.”
In addition to focusing on safeguards for student populations, educational institutions must also see to the safety and training of their staff.
“We are seeing K-12 needing to take a more active approach from an employment policy and training standpoint,” said Brett McKitrick, senior vice president and senior compliance and workplace consultant for USI in Brookfield, Wisconsin.
