New data shows 2020 insurance prices increasing in the education sector
By: Vertafore Data Science Team
The education sector—including both K-12 and higher education—has experienced significant challenges in 2020 as a result of the COVID-19 pandemic. Now, new insights based on data from Vertafore’s RiskMatch® insurance analytics platform shows that schools may have an additional challenge to contend with: an increase in their insurance premiums.
While insurance prices are increasing across a wide range of products, regions, and industry sectors, Education Services are seeing some of the most substantial increases. A survey of 975 policy renewals within the education industry sector shows an average insurance price increase of 2.49% during Q2 of 2020. Only two other sectors are seeing a larger average price increase: public administration and real estate, rental, and leasing.
Average premium changes for renewing policies are increasing in the education subsectors for colleges, universities, and professional schools (+6.42%) and elementary and secondary schools (+4.47%) are seeing meaningful pricing increases. Only the technical and trade schools (-2.09%) subsector is experiencing a meaningful insurance price decrease. In these cases, a meaningful average price change is one in which the median and average price changes are directionally in agreement.
Comparison of Education Subsectors
For colleges, universities, and professional schools the insurance products driving this overall premium pricing increase are property risk (+12.82%), commercial auto (+7.71%), and liability umbrella (+6.61%). Increases in these three insurance coverages have an especially significant impact on the premiums of higher education institutions because they account for 67% of the total premium within the policies surveyed.
Elementary and secondary schools are experiencing mostly the same products increase in pricing: property risk (+8.59%), commercial auto (+8.19%), liability umbrella (+7.14%), and property flood (+4.91%). The volume of total premium within the property risk, commercial auto, and liability umbrella lines of business for both subsectors is the driver for their overall price increase. These four insurance coverages account for 75% of the total premium within the primary and secondary school policies surveyed.
All industry sectors have experienced a meaningful increase in property risk pricing from Q2 2019 to Q2 2020. However, property risk increases seem to be playing a key role in driving premium increases in the education sector because that risk makes up a substantial portion of their overall coverage costs. Property risk pricing has increased 6.06% on average across all industry sectors, with only public administration (+8.53%) and management of companies and enterprises (+7.72%) increasing more overall than the education sector (+7.49%).
Price Changes by Contributing LOB
Additional property risks: General property risk is not the only property coverage that the education sector has seen increase in pricing over the last year. Earthquake, windstorm, and difference in conditions (DIC) coverages experienced pricing increases higher than property risk across all education industries, ranging from 7.75% to 6.54%. In fact, commercial property coverages account for four of the top five fastest increasing coverage prices—the fifth being homeowners’ insurance. While there is insufficient data regarding earthquake, windstorm, and DIC coverages within the education sector specifically, the overall pricing increase across all other sectors—paired with the fact that the education sector is seeing one of the largest pricing increases for property risk coverage—suggests that it is likely that businesses within the education sector are seeing a meaningful pricing increase across all property coverages.
Commercial auto: The pricing for commercial auto has also increased 4.30% on average across all industry sectors, well above the 1.38% average increase across all coverages and industries. The educational services sector exceeded even the average commercial auto price increases during this time, with an average increase of 5.74%.
Workers comp: Interestingly, workers’ compensation coverage is the only line of business that saw an overall decrease in pricing for the education sector by -0.69%. This decrease in education follows a trend of meaningful pricing decreases across all industries (averaging -3.52%).
Education premiums follow overall trends
Because of the mix of risks in their coverages, the education sector is a good bell-weather for premium trends. As the data shows, while education is experiencing more extreme average premium changes for renewing policies, those changes reflect many of the same increases (property and commercial auto) and decreases (workers’ compensation) being experienced by other industries in 2020.
About the Vertafore data science team
The Vertafore data science team works to uncover insights within the insurance industry and leverage those insights to benefit Vertafore customers and the industry.