Aon International Schools Risk Report 2015 (2)

Aon’s 2015 Risk Report for International SchoolsOur knowledge is your advantage

Aon Risk Solutions

Risk. Reinsurance. Human Resources.

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

Section Header . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

Section Topic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

Section Topic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XX

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Section Header . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XX

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Aon Risk Solutions 3

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Responsibility of Managing Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Top Risk Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Managing Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Cost of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

The International Schools Consultancy would like to thank Aon for producing this

report . We are delighted to endorse the report . We encourage school leaders to

review this report to gain valuable insight into current risk and insurance trends .

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X


Section Header . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

Section Topic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

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IntroductionIt is with great pleasure that we present the findings of Aon’s 2015 International Schools Risk Survey .

Aon are committed to the international schools market in Asia and we are committed to raising the profile on effective risk management in the education sector, and believe the key findings of this report will help you make more informed decisions when reviewing your insurance and risk program .

This is the first report of its kind in Asia and we would like to take the time to thank all of those who participated in the survey and hope you find the report beneficial .


BackgroundIn January 2015, International schools across Asia were invited to complete Aon’s International Schools Risk Survey and provide insights on insurance and risk . In total 63 international schools participated .

Respondents by number of campusesRespondents by location

Respondents by teacher population Respondents by total student population

Singapore25.71%

Hong Kong11.43%

224.39%

319.51%

151.22%

Philippines11.43%Thailand

11.43%

Other11.43%

China8.58%

Malaysia8.57%

Japan5.71%

Vietnam5.71% 5

4.88%

Less than 10040%

101 – 25054.29%

251 – 5005.71%

251 – 50028.57%

1,001 – 3,00042.85%

500 – 1,00024.49%

3,001+4.09%

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X


Section Header . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

Section Topic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X

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Responsibility of Managing Risk

Responsibility of risk management

Head of School 44%

Business Manager 20%

Chief Financial Officer 12%

School Governors 12%

Risk/Insurance Manager 8%

Other 4%

Having a risk management plan is an important part of maintaining a successful and responsible school . It will help to protect students and staff as well as physical and financial assets .

The Importance of risk management to schools

Risk management is an important part of planning for schools and our survey highlights that this mainly resides with the Head of School . The process of risk management is designed to reduce or eliminate the risk of certain kinds

of events happening or having an impact on the business .

Definition of risk management and types of risks

Common risks include things like accidents in the workplace or fires, tornadoes, earthquakes, and other natural disasters . It can also include legal risks like fraud, theft, and sexual harassment lawsuits . Once the major risks within your school are identified, you will need create a plan to

minimise or eliminate the impact of negative events .

Goals of risk management

The idea behind using risk management practices is to protect businesses from being vulnerable . Many schools risk management plans may focus on keeping the school viable and reducing financial risks . However, risk management

is also designed to protect the employees, students, and general public from negative events like fires or acts of terrorism that may affect them . Risk management practices are also about preserving the physical facilities, data,

records, and physical assets a school owns or uses .

Strategies for managing risk

There are as many different types of strategies for

managing risk as there are types of risks . Risk can be

managed by accepting the consequences of a risk and

budgeting for it . Another strategy is to transfer the risk to

another party by insuring against a particular, like fire or

a slip-and-fall accident . Finally, the manager can reduce

the risk’s negative effects, for instance, by installing

sprinklers for fires or instituting a back-up plan for data .

8 Aon’s 2015 Risk Report for International Schools

Student safety 15 .57%

Allegations of student abuse 14 .75%

Increasing staff medical costs 11 .26%

Ability to attract and retain top teachers 10 .06%

Changes to legislation and corporate governance 9 .02%

Social media 7 .38%

Increasing competition 5 .74%

Attracting students 4 .92%

Brand and reputational damage 4 .92%

Staff Competencies & Skills 4 .10%

Fraud & theft 2 .46%

Other 2 .44%

Injury to staff 1 .64%

Privacy breach 1 .64%

Increasing litigation 1 .64%

Political change 0 .82%

Property damage i .e . fire, flood etc . 0 .82%

Regulatory breaches 0 .82%

Top Risk Concerns


Student safety

Rated as the number one risk concern and highlights the

importance of documented policies and procedures to

provide a safe and supportive environment within which

students can learn .

This includes minimising the risk of harm both from the

physical environment, but also from acts of violence, physical

threats, verbal abuse and sexual harassment .

Increasing staff medical costs

Medical inflation in Asia is growing at a rapid rate and is

driven by several key indicators

State of the economy that has an impact on the competition

for talent and consequently increases pressure on Private

Medical Insurance coverage

Continued growth in the middle class and high net worth

populations, especially in China, India, Indonesia and

Malaysia

Capital expenditure on new and expanded tertiary healthcare

facilities and investment into new medical technologies

Prescription of generic drugs in lieu of high-cost patented

medications

Escalation in non-communicable disease

Ability to attract and retain top teachers

Closely linked to the concept of good governance is the

ability to attract and retain top teachers . The way the

school is run, from the board through to the principal and

management team, can have a significant impact on the

overall working environment .

The level of trust, respect and transparency afforded by those

in senior positions is key to determining whether staff will

stay, and ultimately whether potential employees view the

school as an attractive place to work .

As an example, schools with a poor retention rate often

reward teachers based on tenure rather than actual

performance . Much can be learnt from the corporate world

in this context . Only 29% of companies classed as average

are good at rewarding and recognising their staff . However,

when it comes to the top-rated companies, 51% of them

excel at rewarding and developing high performers . To be

the best, you have to invest in your people .

Changes to legislation and corporate governance

Good governance is about people – it’s about how

governing boards make decisions that affect people and their

organisation . In fact, all three of the top risk concerns can

be linked back to the effectiveness of the governance of the

school .

Just how much responsibility and involvement does the

board have in high-level risk issues and how much is decided

at a departmental level? The balance between operational

matters to be handled by the principal and staff, and strategic

matters that affect the school and its reputation should be

constantly reassessed by the board .

The make-up of the board is crucial . Do the board members

have the right backgrounds and skills to be able to make

decisions that will stand the school and all involved in good

stead? As the risks and challenges facing schools increase,

the more the skill sets of the board members need to be

developed and their performance evaluated . How they

handle these challenges is critical .


Managing Risks

Over 57 percent of schools indicated that their board is not engaged or partially engaged in risk management A school board, unlike traditional businesses, will typically consist of members from a wide range of backgrounds, with varying

specialities, skills and backgrounds .

Members may not have experience in the corporate boardroom and may not be financially or

commercially focussed .

It’s important to understand the members of your school board and communicate the benefits of a mature risk management

approach in a language they understand .

Having a well-structured risk management framework is critical to promote active engagement around risk management across all areas of the school .

Q . Is the school board engaged in risk management?

Yes To some degree No

42 .11% 36 .84% 21 .05%

Example Scenario

Your school has organised an overseas excursion to

various countries in SE Asia involving multiple students,

teachers and other adult volunteers (includes some

parents) .

Midway through the trip you’re advised that there has

been a bus accident; many individuals on the excursion

have been injured and have had to be hospitalised .

Various travel insurance policies have been arranged

by each individual direct with different insurers, some

insurers offer to repatriate injured persons to first-world

country for medical attention but some insurers do not .

As your school did not arrange a group policy for the trip,

there is no one point of contact to manage the claim .


Over 36 percent of schools do not have a documented social media policy in place .As students have greater access to social media platforms, a large proportion of your school community are sharing their lives via

photos, videos and status updates for friends and the broader public to see .

Regardless of whether your school actively embraces and uses social media or simply wants to protect itself and its employees

from liability, it’s sensible – if not essential – to have a social media policy in place . This should include clear guidelines for the use

of social media within the school environment, and also document how the school should respond in the event of a social media

incident .

The need for a robust social media policy is further supported by the increase in cases of cyber-bullying via social networking sites .

Q . Our school has appropriate controls to ensure confidential data is secure?

Q . In the event of a PR crisis, our school knows what steps have to be taken?

Strongly Agree

Strongly Agree

Agree

Agree

Neutral

Neutral

Disagree

Disagree

38 .30% 42 .55% 10 .64% 8 .51%

23 .40% 36 .17% 21 .28% 19 .15%

Example Scenario

Increasing cyber-bullying amongst school children has

raised new questions in the industry about your school’s

‘duty of care’ .

Government statistics indicate at least one in

ten children will experience cyber- bullying, yet

many parents and teachers do not know where

their responsibility lies, or have the knowledge or

understanding to prevent or manage incidents as they

occur .

1 . Does your school actively discuss cyber bullying?

2 . Do your teachers understand where their duty of

care extends to?

3 . Does your school have a social media policy?

4 . Do you actively engage parents, to communicate

your school’s cyber bullying policy?

5 . Does your school communicate the safety concerns

of technology with your students?

Q . Our school has an established social media / cyber bullying policy?

Strongly Agree Agree Neutral Disagree

34 .04% 29 .78% 23 .41% 12 .77%


Q . Our school has rigorous Health, Safety and Security policies to ensure student and staff safety?


34 .04% 29 .78% 23 .41% 12 .77%

To Consider …

• Are you aware of the legal and industry legislation

that applies to your school?

• How do you keep up to date on changing

legislation?

• Does your school provide workplace health & safety

training to all employees?

• What contractors are in place at your school, and

what risks do they pose?

• Have you invested the time in sharing your social

media plan with your peers and understanding

what they are doing?

• Does your schools existing risk and insurance

program include the cost of PR consultants to

manage a potential crisis?

• Does your school have a written crisis management

procedure in place? And if so is this communicated

to all relevant employees?

• Are your teaching and counselling staff aware of

the steps they must take when an incident of cyber

bullying is reported?

Q . Cost management of Insurance is a key priority?


41 .30% 27 .66% 23 .91% 7 .13%

To Consider …

Your broker can help you minimise premiums by helping

to define your insurance needs and by exploring the

insurance market for the best policy .

You can also reduce your premiums by:

• Not over or under insuring

• Setting appropriate deductible and liability levels

• Staying claims free

To Consider …


Q . Please indicate your most common claims in the last 24 months

Medial claims 52 .94%

Property damage 23 .53%

Injury to students 11 .76%

Equipment breakdown 5 .88%

Injury to staff / volunteers 5 .88%

Medial claims

Medical claims are on the rise and medical inflation is forecast to outpace salary inflation & general inflation in 2015 and beyond

Claims

0%ASEAN (avg) Indonesia

General Inflation Salary Inflation Medical Inflation

Malaysia Philippines Singapore Thailand Vietnam

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%


Property damage

Injury to students

The frequency of natural disasters across Asia in the last few years has seen an increase in property claims . This was

particularly evident for schools in Thailand as a result of the recent floods .

A school in Thailand claimed for property damage to their school’s sports fields, sheds and machinery, as a result of

flooding . Restoration and returfing costs of the fields alone amounted to almost $500,000 . This was in addition to securing

alternative venues and arranging transport, to enable a continuation of many sporting activities at the school in question .

There are a number of claims which fall into this category, including claims with respect to trips and falls, bullying and sexual

molestation and/or harassment .

It’s important for schools to understand which policy they will be covered under:

Student Accident Insurance

Student accident insurance provides cash benefits

for a range of injuries from broken bones to burns to

permanent disabilities, as well as various out-of-pocket

expenses related to an accident .

A major benefit of Student Accident Insurance is that

it can greatly assist in the reduction of the claims for

personal injury (Public Liability) that may otherwise be

directed at the school .

Public Liability Insurance

If a student is injured at school and holds the school

responsible for causing the injury, a school’s public

liability cover may protect the school from the financial

consequences of the accident including compensation

for pain and suffering .

Sexual molestation may also be covered under a schools

public liability insurance, however schools are required

to report any allegation to the insurer as soon as they

become aware of the incident as opposed to if or when

a claim arises .

Asia has seen a significant rise in the reporting of claims

in regards to sexual molestation, it’s important for

schools to understand what their policy response is to

sexual molestation claims, to avoid issues and challenges

that may be faced for claims that fall outside of their

current policy period .


Professional Indemnity

Professional Indemnity insurance protects a school from

claims relating to the services and advice they provide .

This can include claims by students that a school failed

to protect them from bullying, racial vilification and

discrimination .

Q . Are you confident that your insurance will pay out in the event of a claim?

Yes No Unsure

50% 18 .75% 31 .25%

50 percent of schools are unsure or believe their insurance will not pay out in the event of a claim It is essential to continually update and review your insurance to ensure that it is fit for purpose . The scope of coverage in Asia

varies greatly and new and more innovative products are being created to better protect schools .


25 percent of schools are concerned with gaps in coverage Aon are committed to providing schools with seamless cover to address all of the major and top risks concerns highlighted in our

report .

Q . What is your single biggest issue when buying insurance coverage?

Ensuring you have the best available coverage 43 .75%

Gaps in coverage 25%

Understanding the policy wording 18 .75%

Getting value for money 12 .50%

Q . On average, how much do you spend on insurance per year (USD)?

1 – 100,000 12 .5%

100,001 – 250,000 37 .5%

250,001 – 500,000 18 .75%

500,001 – 1,000,000 25%

1,000,000+ 6 .25%

Cost of Insurance



ContactsAon-COFCO Insurance Brokers Co., Ltd. Shanghai+86 (21) 3865 8000

Aon Hong Kong Head office+852 2861 6666

Aon Global Insurance Brokers Pvt. Limited (India)+91 (22) 6656 0505

P.T. Aon Indonesia - Head Office+62 (21) 2985 8500

Aon Japan, Ltd.+81 (3) 4589 4100

Aon Korea Inc.+82 (2) 2260 2600

Aon Insurance Brokers (Malaysia)+60 (3) 2773 7000

Aon Insurance Brokers (Pvt) Ltd (Pakistan)+92 (211) 1126 6266

Aon Philippines+63 2908 1266

Aon Singapore Pte. Ltd.+65 6221 8222

Aon Risk Services (Taiwan) +886 (2) 2325 2221

Aon (Thailand) Ltd. +66 2305 4555

Aon Vietnam Limited +84 (4) 3826 0832

About Aon Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.

© Aon plc 2015. All rights reserved.The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate profes-sional advice after a thorough examination of the particular situation.

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Aon International Schools Risk Report 2015 (2)