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Article | FINEX Observer

FINEX Observer: Higher education focus

Financial, Executive and Professional Risks (FINEX)

By Larry Fine | August 2, 2021

In our mid-year FINEX Observer, we examine the professional, financial and executive risks facing higher education institutions.

It has been a long time since the main issue in higher education was failure to grant tenure claims. It has also been a while since the industry could count on low premiums and retentions. The number of markets writing primary policies in this space has decreased, partly due to an apparent perception that new risks are always lurking just around the corner.

Higher education institutions faced unprecedented challenges in 2020, many of which have continued into 2021. While there have not been any recent high profile admissions scandals or antitrust suits, institutions across the nation have struggled to navigate the everchanging new normal in the wake of the COVID-19 pandemic, including the sudden shift to online learning, a wave of tuition and fee refund litigation, postponed / cancelled athletics, decreases in enrollment, and the demands of compliance with a variety of new federal regulations. As we look to the second half of 2021, we anticipate continued focus on these trends.

Tuition reimbursement

Well over 100 universities were sued in class action lawsuits brought by students seeking reimbursements for tuition and related activity fees, claiming that as a result of a switch to remote learning the students did not get what they paid for. There have been 75 motion to dismiss decisions in the COVID-19 University Tuition Reimbursement cases.1 Although generally universities have had more success in dismissing tuition claims as opposed to claims for the return of associated activity fees, recently there has been an uptick in dismissal rates with federal courts in Pennsylvania, Illinois, and New York dismissing cases outright. Two universities have entered into settlements for $1.25M and $2.4M.1

Line graph showing rising trends in motion to dismiss trends.

Graph showing rising motion to dismiss trends from period from June 2020 to May 2021.

Motion to dismiss trends2

Vaccine requirements

As colleges and universities prepare for the upcoming fall 2021 semester, over 360 institutions have implemented vaccine mandates in order for students and employees to return to campus.3 With the vaccines which are available in the United States only having emergency use authorization, questions concerning the legality and ethics of mandating the vaccine remain. Underwriters are focused on the policies and procedures in place for these mandates, with a focus on how accommodation requests are being handled.

Affirmative action cases

Several major universities have been sued, primarily by Asian Americans, alleging that their consideration of race in connection with their admission process violates the Civil Rights Act. The case against Harvard was dismissed in the First Circuit4, but the plaintiffs have submitted briefs to the U.S. Supreme Court seeking review. In June, the Supreme Court requested that the Acting Solicitor General file a brief stating the government’s position on the issues.5

Sexual abuse cases

In recent years, class actions and group actions against universities in connection with sexual abuse by affiliated doctors have resulted in multi-million dollar settlements (and in one case over one billion dollars).6

Department of Education - Title IX

The recent change in federal administration could lead to changes in 2020’s Department of Education’s final Title IX regulations. In March, President Biden issued an executive order on Guaranteeing an Educational Environment Free from Discrimination on the Basis of Sex, Including Sexual Orientation or Gender Identity.7 The order directs the Secretary of Education to review existing regulations and guidance in order to ensure compliance with this guarantee within 100 days. In early June, a series of hearings took place to hear comments from the public on improving Title IX enforcement. Though it is unclear how the Department of Education will respond to the feedback collected, it is expected that the Biden administration will seek changes to the regulations which were put in place by Betsy DeVos last May.

Fiduciary liability / excessive fee litigation

Excessive fee litigation is an ongoing issue facing the higher education sector, though frequency of these claims has temporarily dipped. What was once considered a risk to mainly large organizations or plans has expanded to affect plans of all sizes including those with only a few million in assets. The defense of these claims is costly, and many settlements have exceeded $10 million or even $20 million. While coverage for these claims is typically available in fiduciary liability policies, insurance carriers are making major changes to their policy structures as a result of these claims. Large self-insured retentions applicable to excessive fee claims or mass/class actions are being added to these policies which have historically carried very low or no retentions.


As a result of the challenges discussed above, even colleges/universities with good risk profiles such as stable enrollment, strong endowment, no financial concerns, no serious claims, etc. (typically the larger state or private institutions) can still expect to see increases of approximately 10%-25% and some pressure on retentions (D&O, EPL, and Fiduciary). For schools who are struggling with the enrollment/have financial insolvency concerns (typically the smaller institutions) or those that have adverse claims history, the market is extremely difficult and very few markets are willing to write the business. Increases can be in excess of 100% with significant retention pressures as well. With major players in this space reducing capacity, sometimes the only option may be to put the existing program into runoff, starting fresh with a prior acts exclusion on the going forward policy.



2 Data compiled by E. Joseph O’Neil and Brittany L. Begen, Peabody & Arnold LLP, July 2021







Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.


Management Liability Coverage Leader, FINEX North America

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