A new report that examines the Penn State University scandal had harsh words for the school’s top officials.
Former FBI Director Louis Freeh – who was hired by university trustees to investigate the scandal and prepare a report – says leaders at Penn State failed to fulfill their duties. He alleges that Penn State officials repeatedly tried to hush up child sex abuse allegations against Jerry Sandusky, a former assistant football coach at the university.
“Our most saddening and sobering finding is the total disregard for the safety and welfare of Sandusky’s child victims by the most senior leaders at Penn State,” said Freeh, who published his report on July 12.
Liability insurance carriers and brokers that offer coverage to higher educational institutions have been watching this case unfold. And one broker says liability insurers are likely to rethink and tighten their underwriting.
“Insurers will require more data from colleges to find out what other programs they may offer. I think insurers will pay more attention to what takes place during summer months, all the camps that take place, what procedures are in place and how schools are monitoring the environment,” according to Bill Waldorf, president of Huntingdon, N.Y.-based Waldorf & Associates, a brokerage that offers insurance services to colleges and universities.
From the general public and even insurance professionals, the perception regarding higher education is still somewhat limited, he told Insurance Journal.
“Probably they have been focusing mostly on young adults – graduate and undergraduate students. But the reality is that nothing could be further from the truth,” he said.
“Universities nowadays are very far-reaching. The population they serve starts with various businesses and daycare and even extends to senior care in certain circumstances. Their exposure is not only to those young adults but to some very vulnerable classes of business. So there is a different kind of responsibility and risk management needs,” according to Waldorf.
Still, the broker doesn’t think there will be a major reaction in terms of the industry exclusions or a sudden spike in premium rates.
“Carriers may approach it with deductible options, or possibly even changing forms,” he said. Some coverages that could change include general liability and directors & officers insurance, he added.
This isn’t the first time that a college or university has been in a position to defend such allegations, he observed. “But I think the facts surrounding this case are really heightening the awareness of the needs for proper risk management and proper procedures.”
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