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Colleges are Facing Skyrocketing Insurance Premiums, Partly Due to Flawed Sexual Assault Proceedings

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Colleges are Facing Skyrocketing Insurance Premiums, Partly Due to Flawed Sexual Assault Proceedings

Minding the Campus

May 9, 2021

There is a growing line of cases in which colleges have been held liable for running defective campus sexual assault discipline proceedings. More than 500 such cases have been brought nationally. As often happens, the plaintiffs lost most of the early cases. In more recent years, however, the cases have noticeably trended against the college defendants….

According to a 2017 story, “[a] five-year study conducted by United Educators found that the average lawsuit filed against colleges by alleged sexual assault perpetrators costs $187,000.”  I expect this number has increased substantially since 2017 as more cases have survived early motions to dismiss, which is the point at which defense costs rise significantly.

A college president responded to one of my earlier emails with a link to a story that appeared last month in the Chronicle of Higher Education. I take no joy in being right in my prediction about skyrocketing insurance premiums. (For the record, I first made this prediction in late 2018.)

The good news is that colleges, to a large extent, can reduce their litigation exposure. I predicted several years ago that Educators United would start offering advice to colleges on how to reduce their litigation risk in much the same way workers compensation insurers have done for decades. I also predicted they would start to use differential pricing to reflect the differing risk profiles. If college A adopts risk mitigation strategies and college B doesn’t, then college A would receive a lower premium.

To take a not-unrealistic example: We can identify, based on a growing line of court cases, certain red flags that increase the risk of adverse outcomes if a college is sued over its sexual assault discipline procedures. These include the use of a single investigator model; inadequate notice of the allegations; not allowing the accused to see evidence, to be represented by counsel, or to call witnesses; not allowing cross examination of witnesses, etc. Considering the recent premium increases, I expect we will see insurance carriers be more proactive in encouraging colleges to reduce their risk profiles.

Colleges face an increasingly complex and unpredictable array of challenges—abuse, harassment, assault, police misconduct, accidents, health and environmental hazards, fiduciary wrongdoing, the pandemic—that are making it more difficult to calculate risk and insure against it.

That’s a big part of why annual insurance premiums have gone up by double digits in recent years. John McLaughlin, senior managing director of the higher-education practice at Gallagher, an insurance brokerage and risk-management and consulting firm, says those increases range between an average of 10 and 35 percent across an institution’s insurance portfolio.

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