The U.S. higher education insurance market is as diverse as the academic degrees these institutions offer. But one recent challenge facing the sector is a downturn in public trust that may be contributing to the increased frequency and severity of claims activity, according to Stacie Kroll, managing director, higher education practice, at Gallagher. Aggregate risks such as antitrust litigation have resulted in a crunch on liability capacity. Business interruption coverage and valuable research stored on campus is also a critical exposure today, she says.
In interviews with Insurance Journal’s Allen Laman and Andrea Wells from RIMS’s RiskWorld in Chicago May 4-7, Kroll discusses top concerns facing this dynamic sector that are putting added pressure on higher education facilities nationwide.
Describe what’s happening in the higher ed insurance market today?
Stacie Kroll: There are two things happening at the same time, in parallel: declining public perception of higher education’s value, and a really challenging insurance market. … Notably, we’re seeing rate increases on the liability side of the house. And we’re also seeing a capacity reduction in liability coverage available where current market conditions are resulting in a reduction of limits and a reduction of overall capacity. I think the public’s perception of higher education today, and how it pertains to their insurance portfolio, is definitely leading to an increase in severity and frequency of claims.
That [trend] has to do with higher education being seen as big business rather than as institutions for global socioeconomic good, which is how I think we were seen maybe 10-plus years ago. Now we’re seeing this declining public perception, which is leading to more claims. More people want to hold us accountable, more people see us as having large wallets, as able to pay these large claims. That is absolutely driving an increase in severity and frequency of claims, and it is directly impacting the insurance market.
From a reputational standpoint, the reputational risk really goes to student enrollment. High education is seeing an enrollment decline. There was already a prediction called the enrollment cliff of 2026 we’ve been talking about for 18 years as the birth rate in the U.S. population fell. … Now, that’s combined with a declining public perception of higher education, and folks aren’t seeing the value or are questioning the value of entering higher education. So, institutions are seeing direct financial pressures as a result of the reputational risk they’re dealing with right now.
