Education CAE Education Industry Outlook 2024

Education

Knowledge is power: Understanding and reducing your risks.

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What to Expect in 2024

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What to Expect in 2024

Financial challenges will continue to pressure budgets, making it difficult for educational institutions to attract and retain educators and protect against risks, such as declining enrolment trends, cybersecurity, student mental health and safety. Damage to brand credibility can be detrimental to any educational institution, making crisis response critical to any risk management strategy. Institutions that invest in proactively managing exposures will move to the head of the class.

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Creating a syllabus of risk management success.

Budgetary concerns will continue to challenge educational institutions: Declining enrolment at the post-secondary level, elevated overhead costs, and lower returns on endowments will strain finances. However, increased provincial funding for primary and secondary education and an uptick in headcount among independent K-12 schools offer reasons for optimism in 2024. Enrolment numbers for higher education continue to drop, though the rate of decline has moderated. Market volatility is affecting returns on endowments, and inflation is increasing the costs associated with maintaining school properties — an issue that came to light several years ago but has not disappeared. And the upward pressure on salaries — which comprise a significant portion of educational institutions’ expenditures — is adding tension to the collective bargaining process in unionized environments and the bottom line. Nearly two-thirds of Canadian education respondents to the HUB International 2024 Outlook Executive Survey listed increased expenditures as

the most significant threat to their institution’s financial stability. As a result, many are looking for ways to cut costs, including insurance spending. However, reducing coverages could leave them vulnerable and fiscally responsible for devastating losses like cyber breaches, property damage or misconduct claims. Educational institutions can implement measures to reduce these risks — and potentially their insurance premiums. For example, increasing the frequency of staff cyber training and engaging a consultant to conduct periodic system penetration testing can both improve cybersecurity and make the organization a better risk to insurers. A broker who specializes in the education space can provide specific risk management resources and offer strategies to improve insurability and reduce coverage costs.

Vitality

Resiliency

Emerging Risks

Resiliency

Economic Viability

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A mass exodus of staff over the last few years has created fierce competition for talent across all education sectors, with ongoing educator shortages in nearly every province. More than 75% of education respondents to HUB’s 2024 Outlook Executive Survey said they were moderately focused on attracting and retaining talent. With current budget challenges burdening educational institutions, increasing salaries to attract talent is not always realistic. However, forward-thinking schools will differentiate themselves through developing a comprehensive benefits strategy that includes employee wellbeing resources and personalized benefits. Currently, only 32% of educational institution respondents offer a benefits program customized to the unique personas of their employees, and just 44% are currently offering lifestyle and alternative insurance options, according to survey respondents.

One of HUB’s education clients analyzed its employee benefits data to obtain a better picture of what mattered most to the workforce. They learned that employees valued pension options that addressed climate change, and they wanted support for infertility. The client was able to increase employee satisfaction significantly without incurring additional costs.

Emerging Risks

Vitality

Economic Viability

Focus on risk education to reduce insurance costs.

In today’s challenging insurance marketplace, educational institutions are taking a more pragmatic approach to risk and making increasingly strategic insurance decisions. Roughly two-thirds of Canadian education respondents to HUB’s survey cited physical abuse claims and the impact of technology among the biggest risks to resiliency. Over the past decade, claims for primary general liability and educators’ legal liability have risen, as have lawsuits against school boards stemming from the misconduct of faculty and staff. In 2020, the Ontario Court of Appeals found a school board vicariously liable for a sexual assault of a student by a teacher. Another school board in Ontario is facing a $2.8 million lawsuit for a similar abuse allegation. Such abuse claims not only take a financial toll on an institution — they can also seriously damage a school’s reputation and ability to carry out its academic mission. Underwriters are increasingly demanding schools demonstrate that they have comprehensive and mandatory abuse and molestation training for all employees — from the senior leaders to support staff — as well as thorough

abuse investigation plans and robust screening policies for workers and volunteers. Institutions such as boarding schools may only be able to procure half of the abuse and molestation coverage they need to protect their endowment in the traditional market. With insurers increasingly adding exclusions to policies that create coverage gaps, more schools are banding together to form captives. A captive allows educational institutions to gain access to greater protection in exchange for taking on some of the risk. Schools pre-fund their expected losses, but also share in any profits gained when actual losses beat expectations. In addition, more educational institutions are taking a strategic approach to securing insurance, leveraging analytical data to view coverage levels against key risks to reduce their insurance spend.

Resiliency

Vitality

Economic Viability

Change the lesson plan to manage shifting exposures.

Evolving risks will continue to be problematic for educational institutions. Technological advancements, economic instability and the increasingly litigious environment are changing the risk profile of educational institutions. About half of Canadian education respondents to HUB’s survey said they felt prepared to address cybersecurity risks, but nearly 45% said they were at least moderately concerned about the impact technology could have to their institution’s resiliency. About one-quarter felt comfortable with the use of artificial intelligence (AI). Regardless of their level of preparation, cyberattacks continue to proliferate. Bad actors are quickly becoming adept in their use of AI software and perceive educational institutions as soft targets with multiple points of entry and a range of personal data to be exploited. Educational institutions experienced an average of 2,314 cyberattacks every week in 2022 — a 43% increase from the prior year. In addition, schools must also develop a plan to handle new technology, such as AI’s potential impact on pedagogical integrity and future graduates’ job opportunities.

With such a wide variety of threats to resiliency, educational institutions should ensure they have adequate cybersecurity protocols and insurance coverage in place, develop and follow concussion protocols for student-athletes, diversify their investments and consider ESG priorities to protect their endowment. An insurance broker that specializes in the education sector can help advise institutions on coverage gaps in policies, identify additional exposures and help determine the right coverage and risk management resources to address emerging risks.

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HUB education insurance, risk management and employee benefits specialists will work with you to develop a tailored strategy that will protect the bottom line, support your workforce and build resiliency for 2024. Here are some initial considerations:

Develop a comprehensive risk plan.

Making enterprise risk management (ERM) a key component of your institution’s culture can help you identify exposures and place your organization in the best position to respond if an incident occurs. Make sure your broker understands how to strategically approach risk and identify gaps in your educational institution coverage.

Create a personalized benefits strategy.

Rely on your carrier in a crisis.

Be transparent with your broker.

Rely on your carrier in a crisis.

Be transparent with your broker.

Develop a comprehensive risk plan.

Employees expect you to support their health, safety and wellbeing. Schools with a benefits strategy based on personalization and fostering quality employee experiences (QEX) will boost engagement, recruitment and retention, and lower risk.

Create a personalized benefits strategy.

An incident can be devastating to an educational institution’s reputation. Take advantage of your insurer’s expertise if an event occurs. They may be able to assist with such areas as legal counsel, crisis management or digital forensics.

Rely on your carrier in a crisis.

Develop a comprehensive risk plan.

Create a personalized benefits strategy.

Be transparent with your broker.

Consistent communication with your broker will help you identify and mitigate issues in advance of your next renewal and position your institution in the best light. Review exposures and insurance needs at least 90 days prior to policy renewal to allow your broker to find the optimal mix of coverage for your educational institution’s needs.

Be transparent with your broker.

Develop a comprehensive risk plan.

Create a personalized benefits strategy.

Rely on your carrier in a crisis.

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When you partner with HUB, you’re at the centre of a vast network of experts who will help you improve your profitability, enhance the vitality of your workforce and remain resilient into the future. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB education advisor. We’re here to help.

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1. Fraser Institute, “Where Our Students are Educated: Measuring Student Enrolment in Canada, 2022,” April 26, 2023.

5. Global News, “Canada’s teachers say ongoing shortage creating ‘crisis,’ What’s behind it?” September 5, 2023.

Economic Viability

Vitality

Resiliency

Emerging Risks

2. Statistics Canada, “Canadian postsecondary enrolments and graduates, 2020/2021,” November 22, 2022.

3. Maclean’s, “Deferred maintenance: Universities can’t keep up with expensive upkeep and repairs,” December 3, 2020.

4. Results taken from HUB’s Outlook Executive Survey, which polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.

6. The London Free Press, “‘Vicarious liability,’ teacher misconduct and the legal risks facing school boards,” January 22, 2023.

7. CTV News, “Cyberattacks increased 20 per cent in Canada last year: IT security company,” January 9, 2023.

Personalized benefits based on data analytics will deliver quality employee experiences (QEX) that improve recruitment and retention. A tailored benefits strategy will better meet employees’ needs, improve wellbeing and strengthen the organization’s culture and is cost-effective for the organization.

of educational institution respondents offer a benefits program customized to the unique personas of their employees.

Protecting endowments is an additional concern for educational institutions, with 29% of respondents citing asset allocation and environmental, social and governance (ESG) considerations as a moderate-to-high risk to maintaining their endowments.

Educational institutions experienced an average of 2,314 cyberattacks every week in 2022 — a 43% increase from the prior year.

One HUB client, a university, found savings by moving to a captive insurance model. By leveraging this structure, the university anticipates long-term reductions in the cost of risk transfer.

Minimizing risk and keeping premiums in check also requires education, awareness and crisis management response planning. Educational institutions should discuss with their broker how to embed risk management in their financial plan — including endowment design and management — to achieve the organization’s long-term goals and build resiliency.

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