Insurers for Colleges May Tighten Underwriting After Penn State Scandal

Liability insurance carriers and brokers that offer coverage to higher educational institutions have been watching the Penn State scandal unfold. And one broker says liability insurers are likely to tighten their underwriting and demand more data from schools regarding protective measures for minors and monitoring policies.

“Insurers will require more data from colleges to find out what other programs they may offer. I think insurers will pay more attention to what takes place during summer months, all the camps that take place, what procedures are in place and how schools are monitoring the environment,” according to Bill Waldorf, president of Huntington, N.Y.-based Waldorf Risk Solutions LLC, a brokerage that offers insurance services to colleges and universities.

The initial perception of risk surrounding higher education is that it is limited to young adults – undergraduate and graduate students. This is simply a misconception that merely skims the surface of all of the actual populations at risk in a college environment, ranging from youths to seniors, he said.

“All institutions of higher education have significant exposure to children. Daycare centers, childhood learning programs, athletic activities and summer camps are typical curriculums within the operations of a college setting,” according to Waldorf.

“Advanced placement courses are provided for underage high achievers, high school athletes are recruited and encouraged to visit campuses and their sports programs, community outreach programs, student teaching internships, athletic events, concerts, festivals, and faith-based programs are all areas that attract youth and other vulnerable populations to college campuses.”

Still, the broker doesn’t think there will be a major reaction in terms of the industry exclusions or a sudden spike in premium rates.

“Carriers may approach it with deductible or sublimit options, possibly even changing forms,” he said. Some coverages that could change include general liability and directors-and-officers insurance.

This isn’t the first time that a college or university has been in a position to defend such allegations, he observed. “But I think the facts surrounding this case are really heightening the awareness of the needs for proper risk management and proper procedures.”

Last week, a report that examined the Penn State University scandal had tough words for the school’s senior management.

Former FBI Director Louis Freeh – who was hired by university trustees to investigate the scandal and prepare a report – alleged at a news conference that former senior officials at Penn State failed to fulfill their duties. He argued that Penn State officials repeatedly tried to hush up child sex abuse allegations against Jerry Sandusky, a former assistant football coach at the university.