Schools hit with cyber price hikes

Virus resurgence remains a major risk management issue for school districts and universities opening in the fall, but others are joining the lineup of top concerns, including cyber protection and campus security. 

Cyber risk has been a pressing worry in both K-12 and higher institutions, some of which are seeing cyber premium increases of as much as 300%, said Julie Theirl, San Francisco-based senior vice president and regional education practice leader at Aon PLC. 

“Cyber and ransomware are increasing at a staggering pace,” she said. “This July 1 (renewal) cycle has been really difficult for most organizations, and I think schools in particular.”

“That quick change to online learning created a huge, increased cyber risk,” said John McLaughlin, senior managing director of Arthur J. Gallagher & Co.’s higher education practice in Rolling Meadows, Illinois. 

Cyber underwriters are looking for institutions that have “stepped up their game” and devoted the resources to provide sufficient protection; those that haven’t are facing nonrenewal or substantially reduced limits and significantly higher premiums, he said. 

San Diego-based Lilian Vanvieldt-Gray, executive vice president and chief diversity and inclusion officer at Alliant Insurance Services Inc., who also manages a portfolio of schools and public agencies, said her school clients collectively have received 37 cyber declinations this year. Those that have found coverage are facing deductibles of $1 million compared with $25,000 and premiums climbing to $500,000 from $55,000 last year. 

One school district, when faced with just $3 million in coverage for $500,000 and a $1 million deductible, opted to use that premium money to invest in technology upgrades instead of purchasing the policy, she said. 

“I have yet to have a client that just forgoes it entirely, but I can see it heading in that direction,” Ms. Theirl said. “What we’re trying to do with our clients is say, ‘Here are the things you need to be doing over the next nine months before you hit the next renewal cycle.’”

This may include installing appropriate fire walls and virus protection, using multifactor authentication and conducting cybersecurity awareness training, she said. 

Schools are also struggling with rising general liability premiums and seeking ways to adequately protect their infrastructure from damage related to social unrest. However, with limitations for such incidents embedded in policies, it is a challenge and “carriers are pulling back from the marketplace,” Ms. Vanvieldt-Gray said. 

It’s equally difficult for colleges and universities to sufficiently insure against their exposures for law enforcement liability, she said. 

“A lot of carriers don’t want law enforcement liability or they’re taking out $1 million retentions for it … or eliminating their coverage,” Ms. Vanvieldt-Gray said. “It’s a major concern. At the same time, certainly law enforcement liability is coming to the forefront.”

Luke Figora, vice president for operations at Northwestern University, said that the sensitivities surrounding the role of campus police is a top concern for the university.

While that risk has always been present, it is “magnified today in terms of the reputational risk of having police deployed, and we’re absolutely paying attention to that,” he said. “If something was to turn violent, when do you escalate toward (police) deployment?”

College and university risk managers are also apprehensive about how divided politics and civil unrest issues may affect students back on campus, experts say.

“How this might present on campuses is certainly a concern,” Mr. McLaughlin said. “There’s concern with security … how to best recognize the exposure and provide supportive security service that is viewed positively by all.” 

Higher education is trying to take progressive steps to head off potential issues by talking to the community, reaching out to students before they return to campus and training campus security teams, he said. While a serious unrest issue would normally be a general liability claim, “depending on the magnitude of the claim, it could morph into an event-driven (directors and officers) claim for failure to take proper precautions,” he said. 

Schools are also much more attuned to the mental health challenges stemming from the pandemic and looking at expanding resources for students and bulking up their employee assistance programs for staff, Ms. Vanvieldt-Gray said. 

For a group of K-12 leaders that Ms. Theirl speaks with regularly, mental health has become a top concern, resulting in a renewed interest in employee wellness programs. Some schools have also purchased an additional trauma coverage that insures against the treatment costs related to a traumatic event and can be accessed by students or staff, she said.