If it has a price, it can be insured. Apparently, that also includes insuring against drops in college enrollment.
The Chronicle of Higher Education recently reported that the University of Illinois at Urbana-Champaign has had an insurance policy in-force since 2015 that would pay for lost revenue if Chinese student enrollment declines.
According to the article, the policy works roughly as follows:
- The university pays over $400,000 in premium per year for a coverage limit of $60 million.
- The policy triggers if revenues decline at least 20 percent in a single year following a drop in Chinese student enrollment in its business and engineering schools.
- Covered triggering events include things like visa restrictions, pandemics, and trade wars.
This policy may seem strange, but it’s basically a type of business interruption insurance, which covers a business’s lost revenue and some expenses following a covered event, like a fire or hurricane. What makes the University of Illinois policy interesting is that it appears to be insuring against some American political events as well.