6 strategies for tackling emerging risks in 2020
Colleges have a wide spectrum of emerging risks that need to be managed in the coming year, from new Title IX requirements to cybersecurity concerns.
Over the past 12-18 months, the overall insurance market for higher education has been hardening, making it even more difficult to place coverage and keep premiums down. This trend is expected to continue into the 2020-21 renewal period. In addition to taking current market conditions into account when setting their insurance budgets, here are six proactive measures colleges and universities can take to help manage their risk profiles.
Colleges who take steps to address these emerging risks not only decrease their chances of losses, but also become a better risk for insurers to underwrite.
- Prepare for Title IX changes. For the first time in over 40 years, the U.S. Department of Education is expected to roll out new Title IX regulations in 2020. Now is the time for colleges and universities to take note of where changes to their policies and processes are needed in preparation of the final regulation release. Once the new regulation has been released, colleges will have limited time to comply, so it’s prudent to be prepared.
- Utilize a property loss control engineer. Even with favorable loss histories, institutions have seen double-digit increases to their property insurance rates. Leveraging a broker’s property loss control engineer to inspect key buildings provides colleges with the information necessary to make appropriate capital improvement expenditures. With budgets tighter than ever, colleges need to know what projects to prioritize based on physical protection outcomes, balanced with the best potential for an insurance premium decrease.
- Tighten up concussion protocols. In addition to raising rates, many carriers have either limited coverage or withdrawn completely for claims stemming from traumatic brain injuries (TBI), usually caused by sports-related injuries. Liability carriers view TBI claims as the next asbestos juggernaut. They have a long latency period, can be costly to defend and settle, and are difficult to properly reserve for. But colleges and the conferences they play in can take steps to help secure coverage. At a minimum, schools should adhere to the NCAA concussion safety protocol. Some insurance carriers have their own concussion protocol requirements, so it’s important to follow the more restrictive protocol.
- Review sexual misconduct policies. Similarly, carriers are beginning to restrict coverage for sexual misconduct claims, especially those involving minors. This is primarily in response to New York, New Jersey and California extending the statute of limitations for sexual misconduct incidents and in reaction to the #MeToo movement. To contain their exposure, colleges need to review their policies on working with minors, and comply with federal and state laws. Again, some insurance carriers have their own requirements, so it’s incumbent upon the school to apply the higher of the two standards.
- Consider captives. The hardening market is also a good time to explore whether forming a captive for general liability exposures and other lines of coverage makes sense. Captives are a great alternate risk tool, especially in a hard or hardening market, and is something institutions of all sizes and types (private or public, not-for-profit or for-profit) should investigate as part of their fiduciary duty.
- Address cybersecurity exposures. Fraudsters are continuing to leverage more sophisticated phishing tactics, as well as exploiting backdoor access via “internet of things” devices to attain personally identifiable information and other protected or private information. It is important that colleges address both the human element exposures through training for students, faculty and staff, as well as the technology exposures though vulnerability scans, system updates and suspicious activity checks.
Colleges who take steps to address these emerging risks not only decrease their chances of losses, but also become a better risk for insurers to underwrite. External partners, like insurance brokers, should be bringing these issues to your attention, and can offer advice and guidance in how to address them.
Bret Murray is the higher education practice leader at Risk Strategies.