Spotlight on: education insurance

Vol 46: Issue 2 | July 2023

In short

• Education institutions face an expansive set of liability risks, with the COVID-19 pandemic exacerbating and adding to traditional threats.
• The escalating threat of cyber attack and recent data breaches targeting schools and universities have compelled many institutions to purchase cyber cover.
• With insurance litigation on the rise, education establishments must ensure they have fit-for-purpose insurance in place, so they are protected if something goes wrong.

Schools, childcare centres, universities and other education institutions have complex insurance needs that are steadily diversifying as the academic landscape evolves. 

While such establishments have traditionally focused on risk areas such as public and property liability and workers’ compensation, over the past 10 to 15 years it’s been ‘softer’ exposures that have come to the fore, says Mark Johnson, CEO of Howden Insurance Brokers Hong Kong. “We’re seeing a lot more discrimination-type claims, whether for ability, gender or race,” he explains, adding that staffing matters — anything from decisions regarding tenure to accusations of inappropriate behaviour — are also generating more claims.

According to Janine Rodgers, group broking manager at Crombie Lockwood, this broad set of exposures means underinsurance is one of the greatest risks to the sector. She points to recent surges in building and labour costs — as well as the complexities associated with replacing contents for schools, including specialist equipment — as just one area where institutions must ensure they have adequate protection. “Costs have increased dramatically over the last two years and the availability of some products is still an issue, with large delays in replacement,” she says.

Covering all bases

A truly effective insurance program must undergo a fit-for-purpose design phase so that it caters for the niche risks associated with education, says Lynette Walsh, Australia’s national client director at Aon.

“The most difficult-to-place risks surround a school’s liability program, specifically in relation to sexual molestation, concussion exposure and hazardous activities,”

she explains.

As well as covering these risks, Walsh says specialist education brokers must create comprehensive insurance packages to ensure clients are protected from a wide range of other exposures, including industrial special risks, student personal accident, cyber, travel, motor, directors and officers, crime, employment practices liability, statutory liability and professional indemnity. “Kidnap and ransom coverage, as well as active assailant protections, can also be of relevance to a school,” she adds.

A mounting cyberthreat

Cybercrime has intensified over the past decade, and the shift to online learning during the pandemic triggered a significant spike in attacks. According to Check Point Research’s Cyber Attack Trends: 2022 Mid-Year Report, the education / research sector is the most targeted industry globally, experiencing an average of 2,297 attacks against organisations every week in the first half of 2022 — a 44 per cent increase compared with 2021.  

Over the past 12 months alone, Australian institutions including TAFE South Australia, Deakin University, the University of Western Australia and Queensland University of Technology have been hit by data breaches, with attacks often causing financial loss, reputational damage, business disruption and legal repercussions. 

In response, educators are increasingly buying cyber cover to soften the blow of a ransomware attack or data breach, says Johnson, who explains: “What you’re really paying for is access to a team that will swing into action with their IT forensics, PR people, legal team and ransomware negotiators.”

Adapting post-COVID

Education institutions globally are facing teacher shortages, exacerbated by the challenges encountered during COVID-19, alongside other factors such as heightened workloads and burnout. Modelling undertaken by the Australian Government indicates that between 2021 and 2025, demand for secondary school teachers is projected to exceed the number of new graduate teachers by approximately 4,100.   

In Hong Kong, Johnson says the post-COVID exodus of many residents, including teachers, has presented a major challenge for education employers. “Attracting teachers is a big issue for a lot of these establishments, and there’s now a lot of attention being paid to the employee benefits side of the equation,” he says. “As an industry, we need to make sure we’re providing good-quality medical, life insurance and travel plans to help our clients attract and retain talent.”

Unsurprisingly, travel insurance requirements for schools have evolved over the past few years, too. Before the pandemic, Rodgers says a fully comprehensive travel program in New Zealand could cover administration staff as well as students travelling overseas without prior notification. “Now, insurers are a lot stricter with student school trips, depending on locations and the type of trip, and costs are a lot higher than previously,” she says.

“Schools need to plan well ahead, but also understand the risk with each trip.”

Catering for specialist risks

Although most education institutions have similar baseline insurance needs, some require specialist cover. Johnson cites the example of a university client that keeps radioactive material onsite, explaining, “We have to word the radiation exclusions in their policy, so they aren’t inadvertently uninsured.”

Likewise, Rodgers says there can be confusion around which parts of an establishment’s physical premises are (and aren’t) covered by property policies. Community-funded assets or buildings, for example, are commonly referred to as overcode and therefore require additional insurance cover. 

With schools and other education establishments accountable to a diverse number of stakeholders, often including children, it’s essential they understand and properly manage any ‘special’ risks, as well as the standard risks that are part and parcel of running a business. Walsh adds: “Any insurance program should be aligned with and tailored to match the unique risk profile of the school.”  

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