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Over the Fourth of July weekend, Jean Demchak’s work didn’t stop. The popular July 1 renewal date for college insurance policies had just passed, and she met with several institutions to review their policies for the next year.

As the meetings wrapped up, she asked if her clients had any quotes to summarize the year and the renewal process. “Let’s not do this again next year,” one said. “It’s been a shitty year,” said another.

Demchak is managing director and global education and public entity leader at Marsh Inc., an insurance brokerage and risk management firm. The insurance market for higher education has hardened over the past several years, and the coronavirus pandemic has added a new strain on underwriters and policy holders alike.

“Our work has absolutely increased tenfold because of the work around COVID,” Demchak said.

Premiums for higher education clients rose between 20 and 40 percent this year, said Bret Murray, who leads higher education strategy at Risks Strategies Company, a national insurance brokerage and risk management firm.

Insurance premiums have been trending upward for years. According to a market survey by the Council of Insurance Agents & Brokers, premiums across all industries have increased for 10 consecutive quarters. In the first quarter of 2020, premiums across the board jumped by 9.6 percent.

Higher education has been in a hard insurance market for two years now, Demchak said. A hard market refers to high demand for insurance coverage coupled with reduced supply, leading to high premiums and a limited number of policies. This process has been driven by changes to a handful of coverage areas, Murray said, including property insurance, general liability and umbrella policies, which provide additional coverage on top of existing plans.

Property insurance premiums have gone up alongside the uptick in claims related to natural disasters, including fires, floods and mudslides, Murray said. For many colleges, their campus location often dictates the price.

“If they’re in a high wind area or a flood zone, and their campus is in that area, it’s not just going to impact one or two buildings -- it’ll impact multiple buildings,” he said.

The coronavirus pandemic has also impacted property insurance premiums. Demchak mentioned a group of 13 public colleges in the Midwest that share an insurance package.

“Their property program went up 50 percent in cost,” Demchak said. “It’s unheard-of, and a lot of it had to do with COVID.”

In an effort to recuperate financial losses, colleges have squeezed their existing property and business interruption insurance policies to determine coverage for damage from mold, bacteria and cleanup costs, Demchak said. Many insurance policies exclude pandemics, and receiving payouts for COVID-19-related damages is difficult.

“The property market has had a constriction,” Demchak said. “One carrier that does property only -- that’s all they do -- had around $400 million in losses only associated with COVID-19.”

Umbrella policies on top of general liability insurance plans have seen the largest price jump, according to Mark Turkalo, national leader of the education placement team at Marsh. Rates for his clients increased by between 30 and 50 percent, with some clients paying more than 100 percent above what they had last year.

Several high-profile settlements have made headlines in recent years. In May, Ohio State University announced it would pay out a $40.9 million settlement to survivors in 12 lawsuits concerning sexual abuse by Richard Strauss, a former university doctor. The sexual abuse scandal at Pennsylvania State University cost the university $237 million in legal fees, settlements and fines. The University of Southern California settled for $215 million after it failed to protect students from sexual abuse by George Tyndall, a former gynecologist in the university's health center.

Millions have been paid out by colleges in response to sexual abuse, athletics and other scandals. The big payouts have made underwriters cautious, Turkalo said, and they have increasingly limited their policies and upped their prices.

“In liability, there’s a lot of exposure, regarding athletics, regarding molestation, assault, fraternities, concussions, so you have a lot of things coming at you at once,” he said. “Especially now, with civil unrest, there’s a concern about law enforcement and how is that going to play out in the courts and what are the settlements going to be.”

Murray highlighted the impact of a latency period for certain types of general liability claims. Damage from sexual misconduct and athletics injuries such as concussions and traumatic brain injuries often reveals itself long after the event took place.

“Traumatic brain injuries have a latency, in the sense where somebody may be injured in a sport, but you may not recognize it until 10, 15, even 20-plus years later,” he said. “You’re seeing carriers increase their rates to offset that exposure.”

Colleges are also seeking different types of insurance coverage. Ken Rodgers, director at S&P Global, noted that some colleges are looking at cybersecurity insurance to protect against online attacks, which has been especially relevant as institutions bring their operations online amid the pandemic.

To keep costs down, colleges sometimes band together, Rodgers said.

“A lot of colleges and universities participate in consortias -- many times self-insured -- as a means to mitigate some of the inherent fluctuation and daily price changes in risk and insurance contracts,” he said. “They’re subject to market forces also, but they tend to be a little more stable because you get the benefit of pooling resources.”

Many insurance policies include exceptions for pandemics.

In May, U.S. Representative Carolyn Maloney, a New York Democrat, introduced the Pandemic Risk Insurance Act, which would mandate that business interruption insurance policies cover losses in the event of a pandemic or widespread outbreak. It would also establish a Pandemic Risk Reinsurance Program within the U.S. Treasury Department that would split the responsibility for paying out covered claims between participating private insurers and the federal government. The bill was referred to the House financial services committee.

Half of Marsh's clients renewed their insurance policies on July 1. But Turkalo is concerned the market could look even worse for institutions looking to renew later in the year.

"Most insurance companies have already made their annual budgets for growth and premium. They don't need to write any more business," Turkalo said. "So going forward, we still have accounts … that have renewal dates in September, October, November, and we're concerned this market will continue to react, so the capacity is even less and the prices will continue to grow."

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