2024 Education Outlook: The Hard Insurance Market

Despite the evolving market dynamics and shifts in risk trends, the core risks identified by the RCM&D Education Practice have remained largely consistent from past years compared to 2024. These risks include:

  • Hard Insurance Market
  • Abuse/Molestation
  • Student and Employee Mental Health
  • Operational Pressures
  • Business Continuity

The continuity of these risks underscores the persistent challenges facing the education sector and highlights the importance of proactive risk management strategies. This blog will delve into the specific difficulties of the hard insurance market and strategies to mitigate them.

Cyber Risks

In the realm of cyber insurance, businesses face escalating risks stemming from the relentless evolution of cyber threats. These risks include cyber-attacks leading to data breaches, business interruptions and compliance challenges with data privacy laws, third-party liability claims and reputation damage. Mitigating these risks requires robust cyber insurance coverage encompassing protection against financial losses, regulatory penalties and reputational harm, along with proactive cybersecurity measures and crisis management strategies. While the cost of cyber insurance has become far more competitive in 2024, the threat landscape has not subsided. Schools should continue to review their cyber security risk protocols, employee training, and maintenance of up-to-date digital risk inventories.  By leveraging these best practices, schools will be able to limit the potential for loss and maintain competitive coverage.

Storms and the Impact on the Property Market

Property is dealing with sustained losses from severe weather[JS1] [SB2] , including significant losses from convective storms, hail and water damage. As these weather-related losses continue to occur, property owners are increasingly recognizing the importance of ensuring adequate insurance-to-value across their portfolio. This involves conducting regular property appraisals, considering inflationary trends and accounting for any upgrades or renovations that may affect the property’s value. In addition, technology solutions such as water intrusion sensors can notify property owners immediately if a leak is detected, ultimately reducing the total damage.

The Auto Market

Physical damage claims and increased liability losses are impacting the auto market which has consistently seen rate increases in the mid to high single digits for many years. Some trends for 2024 include:

  • More claims being filed: Despite the increasing prevalence of Advanced Driver Assistance Systems (ADAS) in vehicles, car owners are still involved in accidents. Several of these collisions can be attributed to both an overreliance on ADAS technology and instances of distracted driving.
  • Increase in the average cost of repairable claims: In early 2023, the average cost of a repairable claim in the United States rose by approximately 8%. Expect continued annual growth between 8% and 10% in the foreseeable future.

In 2024, it is anticipated that the auto insurance market will experience ongoing increases in rates alongside gradual enhancements. Understanding the external factors that impact the market is vital to making informed decisions about coverage. Your insurance broker can provide deep insights into the market to help you determine what coverage is best suited to your changing needs.

Impact of Social Inflation

Social Inflation continues to impact the liability market, mainly for auto liability and general liability. Negative corporate sentiment, aggressive plaintiff attorneys and a continued rise in third party litigation financing are all increasing the cost to defend and settle liability claims. As an example, the average personal injury claim rose a staggering 320% from 2010 to 2020. [SB5] 

Risk Mitigation Strategies

Several risk mitigation strategies can help your institution fare better in this difficult environment, including:

  • Procuring insurance through a consortium of peers: Participating in a consortium typically provides bargaining power, lower rates and enhanced coverage through esteemed insurers by harnessing the combined purchasing strength of multiple schools.
  • Higher retentions, captives or alternative risk financing solutions: It is paramount to select a proficient broker capable of effectively representing your institution and assessing suitable risk management tactics to navigate through this challenging environment.
  • Avoiding complacency during renewals: It is a fact that the majority of submissions to underwriters are lacking key data points and information that insurers need to evaluate your renewal pricing and coverage. Avoiding complacency, promoting your risk management initiatives and other strategies can position your school for a more favorable and timely renewal.

Reach out to an Advisor

We encourage you to reach out to RCM&D with any questions related to your individual institution’s risk management program or for more information on strategies within this report.