State of the Insurance Market Report
2025 Initial Outlook and 2024 Wrap-Up
Education
The first half of 2024 has presented higher education with several major business and insurance issues that are likely to continue to impact educational institutions into 2025.
While there are many factors, there are several recurring concerns:
- Financial Sustainability: Many institutions will likely continue to struggle with financial challenges, including declining enrollments, unsustainable discount rates, and rising operational costs. This may lead to more college closures and mergers.[1][3]
- Demographic Shift: The projected demographic decline in enrollments starting in 2026 will intensify competition among colleges. Institutions will need to focus on new markets, such as international students or adult learners, to offset potential financial deficits.[3]
- Leadership Crisis: The accelerating talent crisis in executive ranks, particularly for college presidents, is expected to continue. The complex role of university leaders, coupled with increasing pressures and scrutiny, may lead to shorter tenures and difficulties in filling these positions.[1][3]
- Technological Adaptation: The continued rise of artificial intelligence and mobile technology will require institutions to adapt their operations, academic programs, and student services. This may require significant investments in technology infrastructure and training.[3][4]
- Operational Resilience: Institutions will need to focus on developing operational resilience across their assets, workforce, planning, risk management, and decision-making processes. This may require reassessing and potentially expanding insurance coverage.[2]
Property and Casualty
In the first half of 2024, higher education institutions faced the following challenges, which pushed universities to address their risk management framework:
- Natural disasters such as hurricanes, wildfires, and floods led to significant losses. These events disrupted campus operations, infrastructure, and student wellbeing, necessitating comprehensive risk mitigation and disaster response strategies.
- Universities grappled with supply chain constraints, which affected the procurement of goods, services, and technology necessary for smooth operations.
- Evolving regulations, including requirements related to student health insurance, cybersecurity, and data privacy prompted institutions to adopt protocols. Noncompliance can result in significant penalties.
- Inflation rates reached their highest levels in 40 years and the insurance industry wasn't immune. As central banks hiked rates to counterbalance inflation, insurers and reinsurers' balance sheets turned red.
- While property and casualty price hikes were among the drivers pumping up premium volume and sending insurance carrier consolidated surplus over the $1T mark for the first time, inflation is driving loss costs even higher and faster, undermining underwriting profitability. United Educators has reported a third straight year with a combined ratio over 100%, largely attributed to social inflation and nuclear verdicts. Combined with rising reinsurance rates, this trend continues to impact underwriters’ perception of rate adequacy and underwriting profitability.
Educational institutions remain vulnerable to societal factors leading to increased jury verdicts and rising defense costs. According to a 2023 report by United Educators, a leading insurer and risk management partner of educational institutions, general liability claim costs have increased by 200% over a four-year period.- Sexual misconduct claims comprise almost 50% of reported general liability (GL) claims. Sexual abuse/molestation claims have increased in frequency and severity. Claims data indicates sexual misconduct losses have grown three times faster than all other claim types over the past 15 years.
- In April, the Biden Administration released new Title IX regulations scheduled to take effect in time for the upcoming school year. Title IX has been in effect since 1972 but has been regularly updated to ensure every student is protected from all sex-based harassment and discrimination. These final regulations further clarify the school’s responsibilities to handle and respond to claims of sex discrimination. These additional measures and the shifting guidance mean educational institutions and insurance carriers will face substantial challenges in compliance and assessing applicable insurance coverage. As insurance carriers continue to decrease capacity and carve back coverage, it is pivotal for institutions to deploy the appropriate resources and partner with risk managers to ensure proper coverage is in place.
Student Health
Student wellbeing remains a top priority as universities grapple with managing health plan costs. The average rate increase for the last three years has been close to 5%, and we expect that to continue into 2024 and 2025.
According to the 2024 Risk Strategies Student Health Plan Benchmarking Survey, three-quarters of participating institutions offer wellness programs that focus on behavioral health services, but also support physical health and prescription drugs. Educational institutions seek to offer plans for dental and vision care, both 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 and captives, to control costs and enhance risk management. Universities continue to adopt cost-effective healthcare solutions like telehealth.
- [1] https://www2.deloitte.com/us/en/insights/industry/public-sector/latest-trends-in-higher-education.html
- [2] https://www.educause.edu/research-and-publications/research/top-10-it-issues-technologies-and-trends/2024
- [3] https://www.forbes.com/sites/forbesbusinesscouncil/2024/02/14/higher-education-faces-hurdles-in-2024/
- [4] https://www.touchnet.com/trends/blog/2024/01/16/top-4-trends-impacting-higher-ed-business-officers-in-2024
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.
Work with a third-party appraiser and/or broker to ensure property values are accurate before heading into the underwriting process.
Carriers may share the cost of an appraisal. Your broker can also provide access to trusted data sources that support real-time property value estimates.
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 your health plan vendors to ensure the most favorable benefits and rates.
Establish cross-functional teams involving risk management, finance, student affairs, and other relevant stakeholders.
Collaborative efforts yield comprehensive risk management solutions.
Whether public or private, system or community college, our national education team will work with you to find solutions that meet the unique needs of your institution.
Download the Report
Our industry and product line specialists have collaborated to provide an update on current trends and market conditions. We invite you to explore their insights by downloading our latest State of the Insurance Market Report.