Education Industry Trends 2023

Institutions that learn from experience will pass the test on risk.

Learn about education market trends and insurance rate changes for 2023.

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Education

HUB 2023 Outlook

What's covered...

Setting the Scene

What to Expect in 2023

Make a Plan

About HUB

Economic Viability

Vitality

Resiliency

Facilities Management

Assess risk

Maintain facilities

Meet the Experts

HUB Education

Setting the Scene

Rising risk and teacher shortages

Public and private educational institutions across all levels face financial challenges from economic uncertainty, but a critical educator shortage remains the sector’s top issue. Institutions also are suffering from deferred maintenance that could spell long-term challenges to infrastructure and fiscal stability.

What to Expect in 2023

After more than two years of upheaval related to the COVID-19 pandemic, educational institutions will struggle to remain fully staffed and financially stable. But institutions can minimize those challenges with a fresh approach to risk management and employee benefits.

Make a Plan

Download our 2023 Education Outlook and Insurance Market Rate Report to see what to expect in the coming year.

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Be Prepared

Assess everything.

To attract educators and guard against burnout, schools need to do a better job of supporting employee health, safety and wellbeing. Give them the ability to personalize their benefits — including their retirement plans — and improve retention.

Determine your maintenance needs.

Be transparent with your broker.

It’s all about your people.

Talk to your broker to determine the right balance of risk and insurance coverage — but before that, it’s essential to work with your broker on a top-to-bottom risk assessment.

Assess everything.

Determine what plant and equipment need repairs or replacement first, and then take immediate action. Ensure your maintenance reserve is fully funded. Be able to show carriers that buildings and equipment are in top shape for 2023.

Determine your maintenance needs.

Be transparent with your broker.

It’s all about your people.

Assess everything.

Be transparent with your broker.

Let your broker know what changes you’ve made so there are no surprises at renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, so your broker can identify the best options. Also, review the retirement plan with your plan administrator to help increase its value and keep fees low.

It’s all about your people.

Assess everything.

Be transparent with your broker.

Determine your maintenance needs.

Meet the Experts

Practice Leader

Education Practice

Diane Stone

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Risk Advisor

Isaac Monson

Education Practice

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Expert

Mason Moses

Education Practice

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Expert

Robert Mansfield

Education Practice

Linkedin Profile

Education

When you partner with us, you’re at the center of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB education insurance specialist.

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Even before the pandemic, private school tuition had already increased at roughly twice the rate of inflation over the last 30 years. With escalating inflation, institutions will be forced to increase tuition to cover the cost of raises, which could hamper enrollment. Many of the elements affecting educational finances are beyond educators and administrators’ control. However, institutions can improve risk management to reduce insurance costs and optimize coverage.

Inflation will hurt margins and budgets.

Soaring inflation will continue to strain budgets at educational institutions. Inflation hit a 40-year high midway through 2022, affecting everything from supplies and maintenance to insurance and teacher salaries. Higher interest rates and economic uncertainty also will hurt budgets, especially for private schools and institutions of higher learning with large amounts of debt. Economic conditions also will affect institutions that rely on endowment returns and charitable giving to meet budgets — and even more for institutions planning capital projects. Many of these schools, colleges and universities will need to raise tuition and fees, but that comes at a time of declining enrollment at colleges and universities. The COVID-19 pandemic shifted enrollment between public, private and charter schools, and each will need to contend with rising staff salaries due to inflation and the ongoing teacher shortage.

1. Recruiting.com, “Proven Strategies for Increasing Teacher Retention Rates,” accessed October 20, 2022.

Facilities Management

Resiliency

Vitality

Economic Viability

Facilities Management

Resiliency

Vitality

Economic Viability

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tools to identify individual employee needs, and the benefits that can help meet those needs. For instance, a young teacher with no dependents may be primarily interested in help paying off student loans and financial wellness programs to prepare for the future. Likewise, a teacher with a growing family may need help finding a mortgage or caring for aging parents. As a result, personalized benefits, including retirement plans and financial wellness programs, can generate loyalty to their employers and a connection to their profession.

Solving education’s biggest HR problem will require a new lesson plan.

K-12 education is facing a nationwide teacher shortage; conservative estimates peg teacher vacancies at more than 36,500 nationwide, with more than 163,500 positions filled by teachers who are not properly certified. Most elementary and high school teachers enter the field with high expectations, yet half will leave the profession after five years. Salaries have risen, but it’s often burnout and job disappointment that cause turnover. Given the difficulty of filling positions, educational institutions are rethinking benefits, so they can holistically support the physical, emotional and financial wellbeing of their staff. Teachers and other staff also need benefits to support their out-of-classroom lives, which can improve their physical, emotional and financial wellbeing. Personalized benefits are key. Educational institutions can use data analytics and other

6. Politico, “The teacher shortage problem is bad. Really bad.” August 15, 2022.

Facilities Management

Resiliency

Vitality

Economic Viability

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They also should have a reporting and communication plan in place to effectively handle allegations and limit reputational harm. And unfortunately, cyberattacks against educational institutions will continue and likely rise. The amount of personal information that schools maintain on students and employees — and the number of entry points bad actors can access — also remains a growing concern. More than half of K-12 schools and nearly two-thirds of higher education institutions reported ransomware attacks in 2021.

Institutions will need to manage the fallout from abuse claims and cybercrime.

Cybercrime and student abuse pose an existential threat to educational institutions’ long-term viability as operating entities — making risk management and insurance essential tools for ensuring resiliency. Claims and litigation related to physical and sexual abuse of students have plagued all sectors of education and will continue to do so in 2023. Abuse claims in K-12 schools have risen, and colleges and universities have paid billions to settle allegations of widespread sexual abuse. These high-dollar claims have led insurers to reduce capacity for abuse and misconduct coverage or exclude it altogether on general liability policies. Risk management is crucial to preventing and mitigating abuse. Schools need mandatory child protection training for every staff member, as well as background and reference checks.

9. Cybersecurity Dive, “Ransomware attacks surge in education sector,” July 14, 2022.

Facilities Management

Resiliency

Vitality

Economic Viability

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School administrations can avert the crisis through implementing long-term capital planning for facilities. After conducting a facilities audit and developing an engineering report, they must determine an annual contribution to a facilities maintenance reserve (ideally 3% of replacement value) and determine investment strategies to ensure that reserves keep up with inflation. Devising a strong risk management and insurance strategy is crucial — without such strategies, it’s unlikely any school will be able to avoid exorbitant maintenance expenses in the future.

A hidden crisis in plain sight.

For years, there has been a “quiet epidemic” of deferred maintenance in education due to poor long-term planning; school closures during the COVID-19 pandemic only made the problem worse. Increasing construction costs and budget constraints haven’t helped matters. Public K-12 schools face a shortfall of $46 billion to keep school facilities functioning, though, prior to the pandemic, more than half reported a need to update or replace multiple building systems. Facing budget constraints, many schools do not set aside adequate reserves for desperately needed facility upgrades or maintenance projects. Lower charitable giving and underperforming endowments have further strained schools’ bottom lines. With deferred maintenance piling up, institutions and school districts will ultimately pay higher construction costs in the future. They’ll also have to pay more for property insurance on eroding facilities.

10. Gordian, Falling Behind: Aging Facilities and Deferred Maintenance in American Schools, accessed October 13, 2021.

HUB education insurance specialists will work with you to develop a tailored strategy that will protect the bottom line, support your workforce and build resiliency for 2023. Here are some initial considerations:

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Be prepared. Talk to a HUB advisor today.

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Focus on benefits

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1. Lorem ipsum dolor sit amet, “consectetur adipiscing lorem elit” Ipsum dolor sit amet, 2022

2. CBS News, “Inflation hit 9.1% in June, highest rate in more than 40 years,” June 13, 2022.

3. Forbes, “New Report: The College Enrollment Decline Worsened This Spring,” May 26, 2022.

4. Investmentpedia.org, “15 Big Financial Challenges Facing Private Schools in 2022,” May 21, 2022.

5. Fitch Ratings, “Higher Education Tuition Hikes Insufficient to Offset Inflation Pressures,” July 14, 2022.

7. Education Week, “How Bad Is the Teacher Shortage? What Two New Studies Say,” September 6, 2022.

8. Recruiting.com, “Proven Strategies for Increasing Teacher Retention Rates,” accessed October 6, 2022.

11. U.S. Government Accountability Office, School Districts Frequently Identified Multiple Building Systems Needing Updates or Replacement, June 2020.