Navigating the Picket Line
Last year saw a significant increase in college students protesting everything from racial and gender discrimination to sexual assault and cultural appropriation.
College risk managers must strike a balance between allowing students their say and keeping them — and others — safe from harm and keeping college property safe from damage.
Last May, Columbia University student Emma Sulkowicz walked across the graduation ceremony stage carrying a mattress — as she similarly did around campus during the school year — to protest campus sexual assault. According to the Washington Post, Sulkowicz said she was raped in her dorm room in her sophomore year, but her attacker was cleared in a school hearing and the mattress symbolized what she said was the university’s flawed handling of her complaint.
Yale University students in November clashed with faculty over the issue of ethnically insensitive Halloween costumes, leading Yale lecturer Erika Christakis to resign after criticizing protestors for not allowing free speech.
In January, Ithaca College president Tom Rochon announced his retirement after an uproar over his handling of an incident during which two white men used racially charged language to refer to a black student participating in a roundtable discussion, among other incidents, according to NPR.
Then there is the example of Princeton University students demanding the name of Woodrow Wilson, former president of the U.S. as well as namesake of a school at the university, be removed because he held racist beliefs.
VIDEO: PBS looks at events in Mizzou, Yale and beyond as campus protests stir fresh questions about free speech.
Many of these movements have gone beyond the traditional expression of discontent and are actually taking administrations to task, asking them to intervene and police what they view as improper behaviors, said Bertrand Spunberg, practice leader for executive risks, Hiscox USA in New York City.
At Mizzou, Yale and beyond, campus protests stir fresh questions about free speech
Some administrators are pushing back, he said. Oberlin College student protestors in January presented president Marvin Krislov with a 14-page list of demands that included, among other things, the immediate firing of some Oberlin employees and curriculum changes, including that students of jazz “should not be forced to take courses rooted in whiteness,” according to Inside Higher Ed.
“If these demands are not taken seriously, immediate action from the Africana community will follow,” the protestors’ letter ended.
Krislov rejected the demands “because he believed that the nature and format of those demands ran counter to the kind of ‘collaborative engagement’ that should exist between the school and its student body,” Spunberg said.
“Schools are trying to maintain that collaborative engagement by making sure they listen to students without giving in to the public relations fear that they are going to do or say something that angers students, donors or other stakeholders,” he said.
There’s “an interesting tension at play here” as institutions try to balance free speech and social or racial sensitivity, Spunberg said.
“As colleges and universities try to find the right balance, it’s reasonable to expect that we may see claims at both ends of the spectrum between allegations of undue restraint of free speech on campus and wrongful termination lawsuits by staff who were fired because they said or did something that was viewed as contrary to the student population’s beliefs,” he said.
There’s “an interesting tension at play here” as institutions try to balance free speech and social or racial sensitivity. — Bertrand Spunberg, practice leader, executive risks, Hiscox USA
The biggest challenge for institutions and campus police when there is “spirited discourse” is ensuring that protests remain peaceful, and not devolve into criminal acts of civil disobedience, such as looting, property damage and bodily injury, said Leta Finch, national leader, higher education practice at Aon Risk Solutions in Burlington, Vt.
Many schools have policies for student protests, and instructions for campus police to manage those protests, Finch said.
Students typically are protected on campus, but once a protest becomes civil disobedience and crimes are committed, then police have the power to arrest.
Some schools like the University of Missouri have created “safe zones” for students to protest that prohibit access not only to those opposing them, but also media outlets. But Finch said she is “not so sure safe zones are the solution — they add fuel to emotion.”
Risk managers should make sure the institution has adequate coverage for liability and property damage, and should also be aware of the university’s policies and procedures if protests lead to civil disobedience, she said.
“If there aren’t any, they should start asking if they can be developed, because every school is at risk for these types of occurrences,” Finch said.
John McLaughlin, managing director, higher education practice at Arthur J. Gallagher & Co. in Itasca, Ill., said that most university business continuity and insurance programs are focused on a “moment-in-time” event such as a natural catastrophe or even a shooting.
“But what has been happening with recent protests is that they are stretched out over long periods of time, so a school’s crisis response team is constantly on point focusing on one event after another,” McLaughlin said.
Crisis response and threat assessment teams must also consider that threats could come from outside the campus community, he said.
As the teams begin to cover new territory, they must ask themselves how far their investigations and interventions should go, lest their actions be misconstrued and inflame protestors even further.
There are also financial implications of decisions made under pressure from protestors, McLaughlin said.
At the University of Missouri, where student athletes threatened to boycott a football game in support of student protestors, the financial impact could have been significant. Traditional event cancellation coverage may not respond to financial loss from that type of intentional act.
“However, I suspect underwriters will be engaged in some deep conversations about how coverage might be amended to provide at least some coverage for this type of situation,” he said.
Terri Taylor, senior policy and legal adviser at Education Counsel LLC in Washington, D.C., said that student demonstrations can be an opportunity to open a dialogue on campus.
If a school cannot or will not meet students’ demands, it should address what is at the heart of the complaints, she said.
“Students may demand one thing they think will address their concern, but administrators have the opportunity to think beyond the demand and also consider what conditions or policies may be contributing to that,” Taylor said. “That shows engagement, and they could offer something that students might not directly be asking for, but something that could bring up change.”
Creating Coverage Options
The Kansas budget crisis led to a drastic cut in education funding in the state, devastating school budgets. With a single carrier accounting for up to 90 percent of the property/casualty insurance market for schools, there was little chance of any school finding premium savings. Many schools went without coverage.
Charlie Herr’s solution: introduce a risk-financing pool. Herr set up the Kansas Educational Risk Management Insurance Pool within months despite significant red tape from the state, according to Roger Miller, business manager for pool member Rose Hill Unified School District 394.
Participants in the new pool, which launched on July 1, 2015, realized immediate benefits, including: an average 26 percent reduction in premium; an average 500 percent reduction in property deductibles, including wind and hail-specific deductibles; 100 percent increases in collective liability limits, including general liability, school board legal and all other professional liabilities; and a potential dividend/surplus return of up to 13 percent of premium.
“This initial savings allowed us to hire two additional kindergarten teachers,” noted Clint Schutte, assistant superintendent for business/finance with Haysville USD 261.
“Mr. Herr has been great to work with, because he is working for us, not telling us what we should do,” observed Joel R. Lovesee, superintendent of Bluestem USD 205.
Working Tirelessly for Growth
An Indiana-based insurance pool for school systems was in trouble. Growth in the pool was stagnant; coverage disputes were thorny and the program’s overall design was in question.
What better time for Tyler LaMantia, an area vice president, and his colleagues to get to work? Hired as the program administrators for the pool for 2015, LaMantia and the Gallagher team got things straightened out. LaMantia revamped the program, resulting in coverage enhancements — including increased property limits — and aligning the policies of the two excess carriers on the program to eliminate any gaps. He also went to bat for the pool and got some coverage denials reversed.
“What makes him special is that he can relate to lay people,” said Mary Roberson, the co-chairperson of the Educational Service Centers Risk Funding Trust.
Not only did LaMantia get the pool structured properly, he got it growing again. From 31 members when LaMantia and AJG got involved, the pool now boasts 40 members.
“He worked tirelessly for growth and that didn’t come easy,” said Roberson.
Getting a big claim reversal overturned also signaled to the pool members that they had a worthy advocate in Tyler LaMantia.
So committed was LaMantia to the pool’s success that he reached out to the chairman of the pool, while traveling, about some questions from members on the restructuring of the pool’s finances … LaMantia was out of town for his wedding at the time.
Success Under Pressure
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Michael and the Tornado
Sorting out the loss-fund contributions for a 175-member school district insurance pool can be an actuarial nightmare. Get it wrong and you create pain for school boards and superintendents.
Searching for Stability in Cyber Space
As headline-grabbing breaches crack systems and tarnish reputations of major retail, healthcare and financial companies, the need for cyber insurance has become increasingly apparent.
Given the constantly changing nature of cyber risk and the market landscape, creating a stable, sustainable cyber insurance business demands a prudent approach, with an eye on the long road.
“We’ve seen carriers jump in and out, wanting to take advantage of a new opportunity, but perhaps underestimating the risk,” said Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance (BHSI).
“As cyber exposure became more tangible to carriers, in-force coverage was tested and many made radical changes to pricing and availability of coverage. BHSI is committed to entering the cyber market in a thoughtful and sustainable way. We want to be there for our customers as the risks continue to evolve.”
Diverse, Evolving Risks
Cyber exposure – and coverage — have been evolving, posing different risks and underwriting challenges for different industries. The technology, financial services and healthcare industries illustrate the diverse issues that must be considered in order to provide effective, financially sustainable cyber solutions.
The technology sector was the first cyber battleground, and technology E&O forms included some cyber coverage by virtue of the nature of the risk. “There’s inherent cyber coverage for third party liabilities in E&O,” Librizzi said.
While coverage is widely available, tech companies pose challenges to underwriters because of their unique position in the cyber “supply chain.” These companies provide software, hardware and cloud services; virtually every organization in the world is dependent on a tech provider of some stripe. If an insurer is covering both the provider and its clients, the aggregate risk should be monitored closely.
Think of a DOS attack on a cloud provider that prevents all of its clients – which could include anyone from a bank to a retailer or transportation company — from accessing stored customer or corporate data or running cloud-based service apps. That single attack could bring business in multiple industries to a grinding halt, potentially causing business interruption and E&O losses.
The tech industry hasn’t seen a large scale event like this yet, but it isn’t waiting around for one to strike before addressing the underlying risk. Controlling and accounting for the aggregate exposure will mold the direction that coverage development takes.
“Our combined form, introduced in October, 2015, is a comprehensive solution that includes first and third party cyber coverage as well as traditional E&O coverage,” Librizzi said.
However, that approach may not be appropriate for other industries. Financial Institutions, for example, may seek a dedicated cyber only policy which does not include traditional E&O coverage.
While banks typically have strong protocols for network security and privacy, they also have a much greater exposure in massive stores of customer data. Financial Institutions are looking to address liability in the form of class action lawsuits or heavy regulatory investigations and fines emanating from cyber, and may not want to compromise their traditional E&O limits.
“Additionally, given the increased reliance on outsourced providers for technology solutions, we have started to see the introduction of sub-limited coverage for dependent business interruption and payment card industry (PCI) fines and assessments as enhancements to coverage,” Librizzi said. “We might see those sub-limits go to full coverage as competition gets heavier.”
Other industries, which may not be as advanced as financial institutions in addressing cyber threats, have suffered more from a lack of robust cyber coverage that can keep up with increasing exposure.
Healthcare, for example, has seen a surge of cyber attacks since hospitals and other health systems went electronic. To a hacker, healthcare providers represent a warehouse of valuable personal identifiable and protected health information.
Email addresses from healthcare systems typically are white-listed and less likely to get caught in a spam filter, giving hackers incentive to obtain access and gain control of a healthcare provider’s network in order to launch phishing attacks.
After some high-profile breaches in 2015, Human Health Services and the Office for Civil Rights came under scrutiny for not doing enough enforcement of HIPPA. Fines imposed by regulators increased dramatically over the past decade, and seem poised to only get higher.
“They’ll be ramping up enforcement of regulations in 2016, and that’s only a peek of what’s on the horizon,” Librizzi said.
The burgeoning of healthcare’s cyber exposure has challenged the insurance industry to better understand the nature of the risk and how best to secure hospital systems. Coverage for this sector remains the most difficult to write effectively.
BHSI understands the need for different customers to have different solutions. Some customers desire a dedicated cyber policy that does not include traditional E&O coverage. BHSI’s Network Security and Privacy stand-alone policy is designed to address the needs to those customers.
“The cyber exposures and coverages needs of healthcare, financial services and technology are on different timelines and will look very different in the future,” Librizzi said.
Even in more mature markets, the conflation of commercial and personal cyber risk will challenge insurers going forward. Most existing cyber products don’t cover property damage and personal injury; as the risks emerge and the Internet of Things becomes more pervasive, the coverage will have to evolve as well.
“We must always be thinking about what is on the horizon from a risk and coverage perspective – our technology driven society demands it,” Librizzi said.
Anticipating challenges and adapting to each industry’s needs has been a cornerstone of BHSI’s approach to cyber. It’s careful and measured approach has also helped the specialty insurer build an arsenal of experts and ancillary services to help clients better grasp and mitigate their exposure.
“We know the importance of really understanding the risk and communicating it clearly to our customers,” Librizzi said. “We don’t bury our coverage in a pile of definitions, and we provide the expertise to help insureds stay ahead of the next big breach.”
To learn more about BHSI’s professional liability products, visit http://www.bhspecialty.com/.
Berkshire Hathaway Specialty Insurance (www.bhspecialty.com) provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss and homeowners insurance. The actual and final terms of coverage for all product lines may vary. It underwrites on the paper of Berkshire Hathaway’s National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. Based in Boston, Berkshire Hathaway Specialty Insurance has offices in Atlanta, Boston, Chicago, Fort Lauderdale, Houston, Los Angeles, New York, San Francisco, San Ramon, Stevens Point, Auckland, Brisbane, Hong Kong, Melbourne, Singapore, Sydney and Toronto. For more information, contact [email protected].
The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service. Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.