State of the Insurance Market:
2025 Outlook

Education

Higher education faces critical challenges in 2025 and beyond, including demographic decline, financial pressures, increased competition, and shifting student expectations for flexible, career-focused learning. However, opportunities abound in addressing the needs of non-traditional students, leveraging digital transformation, expanding online offerings, and adopting data-driven, competency-based approaches.

To thrive, institutions will need to continue to innovate through flexible recruitment strategies, diversified program models, and investments in technology and cross-campus collaborations. These proactive adaptations will ensure their relevance and sustainability in an evolving landscape.

Market Conditions

 

Higher education institutions could face several potential risks and opportunities in 2025 perhaps extending into 2026.

Risks

  • Demographic decline: The number of traditional college-age students is projected to decline after 2025, potentially leading to enrollment challenges and financial strain for many institutions[1].
  • Financial sustainability: With the demographic shift, many institutions may face financial difficulties, potentially leading to program cuts or even closures[2].
  • Increased competition: As the pool of potential students shrinks, competition among institutions for enrollments will likely intensify[2].
  • Changing student expectations: Institutions that do not adapt to evolving student demands for digital experiences and flexible learning options may struggle to attract and keep students[3].
  • Student activism: While a longstanding tradition on college campuses, recent protests, particularly concerning First Amendment rights, have been highly dynamic and are expected to persist in 2025. This trend underscores the need for colleges and universities to carefully evaluate their policies to effectively navigate the evolving political landscape.

Opportunities

  • Non-traditional students: The projected 11% increase in degree-seeking students aged 25-34 between 2015 and 2025 presents an opportunity to expand offerings for adult learners[4].
  • Digital transformation: Institutions that invest in high-quality digital experiences can improve student satisfaction and potentially gain a competitive edge[3].
  • Cross-campus collaborations: Building partnerships and collaborations across campuses can help institutions share resources and expand their offerings[3].
  • Data-driven decision making: Using data analytics can help institutions make more informed decisions about programs, recruitment, and student support[3].
  • Online and blended learning: Expanding online and blended learning programs can attract a broader audience, including non-traditional and international students[5].
  • Competency-based education: Developing competency-based programs and focusing on skills development can help institutions better align with workforce needs[6].

To navigate these risks and capitalize on opportunities, higher education institutions will need to be proactive, innovative, and adaptable in their strategies for recruitment, program offerings, and operational models. We help in developing strategic and enterprise risk management programs which can be extremely valuable in navigating the challenges ahead.

Citations

Higher Education Property & Casualty Insurance Landscape

 

Property Insurance

  • The property insurance sector is stabilizing, marked by moderate rate increases. Insurers focus on accurate property valuations and risk assessments, especially for institutions in disaster-prone areas. Precise property values are crucial for adequate coverage and favorable underwriting.

Casualty Insurance

  • The casualty insurance market continues to adjust due to social inflation and complex legal environments, leading to rising liability claims and litigation costs. Insurers are adopting cautious underwriting practices and, in some cases, rate adjustments.

Large Losses Rising at K-12 and Higher Ed Schools

K-12 schools, colleges and universities are suffering an increasing number of publicly reported large losses of at least $2.5M, and those losses are becoming increasingly costly.

Number of LossesEducation chart_Number of Losses

Total Amount of LossesEducation chart_Amount of Losses

Reprinted with permission by United Educators.

Key Risk Exposures

  • Cybersecurity threats: Educational institutions are prime targets for cyberattacks, necessitating robust cybersecurity measures like multi-factor authentication and incident response plans to mitigate financial and reputational damage.
  • Student mental health: Growing concerns over student mental health issues can lead to increased liability claims. Institutions are encouraged to enhance mental health support services and implement proactive measures.
  • Regulatory and legal compliance: Federal directives, such as the ban on diversity, equity, and inclusion (DEI) programs in institutions receiving federal funding, introduce new compliance challenges. Non-compliance could result in financial penalties or loss of funding.
  • Enrollment fluctuations: Declining enrollment numbers pose financial risks, affecting revenue streams and operational sustainability. Strategic planning and diversification of recruitment efforts are vital.
  • Campus safety and security: Campus violence and safety incidents remain a concern. Comprehensive safety protocols and regular training can mitigate these risks and favorably influence insurance premiums.

Educational institutions should adopt a proactive risk management approach, including regular policy reviews, staying abreast of regulatory changes, investing in cybersecurity, and fostering a safe and supportive campus environment. Collaboration with insurance professionals specializing in the education sector can provide tailored solutions.

Student Health

 

Student well-being, including mental health, remains the top priority as universities grapple with managing health plan costs. The average rate increase for the last three years has been close to 5%; however, we expect trends for 2025 to be higher.

According to the latest Risk Strategies Student Health Plan Benchmarking Survey, more than three-quarters of participating institutions indicated that improving student health plan communications was a priority, second only to managing costs. About a third of institutions made medical plan changes by increasing deductibles, copays, and out-of-pocket limits. Just under 20% of institutions made changes in pharmacy benefits by focusing on higher cost share for non-formulary and specialty drugs. Educational institutions continue to offer wellness with a strong focus on therapy visits, 24/7 crisis assistance, and psychiatry visits. Educational institutions continue to offer plans for dental and vision care, as standalone coverage and bundled with medical.

This approach targets comprehensive care within limited budgets. In the past year, schools have explored alternative financing, such as self-funding, to control costs and enhance risk management. Universities continue to adopt cost-effective healthcare solutions like telehealth and emerging virtual care programs.

When determining pricing, carriers are focused on the following:

  • Enrollment mix: A high percentage of international versus domestic students is a favorable underwriting factor as international students tend to be lower utilizers of health coverage.
  • Health: The overall health and medical claim history of enrolled students - a favorable risk profile involves a healthier student population with fewer expected claims.
  • Effective cost management practices: These can include alternative and regional network opportunities and focusing on high-cost specialty drugs.
  • Claims reporting: Understanding claim utilization can help monitor costs and trend drivers. The Risk Strategies education survey indicated that two-thirds of institutions considered data-driven decisions a priority.

Risk Strategies is concerned about coverage consistency. Variations in terms, benefits, and pricing across different states make it harder to achieve coverage equity for students.

Recommendations

 

To navigate the complex insurance landscape, we recommend the following strategies for clients:

Checkmark-2024-SOTM

Conduct a thorough assessment of risks across property, casualty, and student health. Identify vulnerabilities and opportunities for improvement and develop risk management strategies that align with institutional goals. Be alert to the emerging trends noted in the market conditions above.

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Work with a third-party appraiser and/or broker to ensure property values are accurate before the underwriting process. Carriers may share the cost of an appraisal. Brokers can also provide access to trusted data sources that support real-time property value estimates.

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Prioritize student wellbeing as a core component of insurance coverage. Seek insurance plans that offer comprehensive mental health support to ensure academic success and overall wellness. As a plan fiduciary, conduct a regular assessment of health plan vendors to ensure the most favorable benefits and rates.

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Establish cross-functional teams involving risk management, finance, student affairs, and other relevant stakeholders. Collaborative efforts yield comprehensive risk management solutions.

Education-Recommendations-SOTM-2024
Education-Banner-Resize-for-SOTM-2024

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.