
Frank Cella
Marsh’s US Education Industry Practice
In this Q&A, we sat down with Frank Cella, Marsh’s US Education Industry Practice Leader, to discuss the key findings from Marsh’s report, Higher Education: Navigating the new normal
Many colleges and universities are grappling with rising insurance costs and fewer coverage options. This, coupled with a challenging insurance market, is making it harder for institutions to secure affordable, comprehensive policies. To mitigate the risks they face, Marsh is encouraging institutions to adopt holistic, integrated risk management frameworks, explore innovative insurance solutions, and strengthen their cybersecurity and liability mitigation strategies. Proactive planning and diversification of revenue streams, along with a focus on resilience, are essential for maintaining stability in this current environment.
Let's start with demographic shifts, which have a projected 13% decline in high school graduates through 2041, causing enrollment volatility and financial risks for tuition-dependent institutions. This is prompting a need to diversify revenue and rethink strategies. Cybersecurity threats are intensifying, as schools face frequent, costly cyberattacks that threaten finances and reputation. Liability risks are rising due to increased litigation around issues like sexual assault and sports injuries. Climate change adds another layer of risk with severe weather damaging campus property. Institutions are realizing that these risks don’t exist in isolation; they’re all connected.
We’re encouraging clients to be proactive and strategic. This means not just buying insurance but also investing in risk mitigation, like strengthening cybersecurity defenses, updating policies around liability, and preparing for climate-related risks. We also advise exploring innovative risk financing options and alternative coverage solutions. Ultimately, it’s about building a comprehensive risk management framework that’s flexible and forward-looking
One of the fastest growing concerns we are seeing is cybersecurity. The education sector was the top global target for cyber threats in 2023, with over 66% of higher education institutions hit by ransomware attacks. The average ransom payment was around US$4.4 million, which is staggering. We saw an uptick due to educational institutions housing a vast amount of private information, making them very alluring to bad actors. Beyond the ransom itself, breaches can cause massive reputational damage and regulatory headaches. Protecting sensitive student and research data is critical, and institutions must invest heavily in cybersecurity defenses and incident response planning.
The insurance market is definitely tightening, with many insurers and reinsurers pulling back due to long-tail liabilities and legal challenges. This means higher premiums, more exclusions, and coverage that’s harder to get, which is putting real pressure on colleges and universities. But these insurability challenges aren’t new; similar issues arose in the 1970s and 80s, which led to the creation of specialized risk pools like United Educators. Today, institutions can draw on that history by exploring collective risk-sharing and innovative solutions to better navigate this tough market and protect their financial stability.
Marsh’s US Education Industry Practice