As a result, higher education institutions are looking at ways they can assist their students in the private rental market.
One possible option is for a university to guarantee student rent. However, whilst rent guarantee schemes are of obvious benefit to students, they do present a financial risk to universities. Insurance-backed schemes are now starting to emerge which may help to meet student needs whilst also protecting the university's financial liabilities.
For governance and risk control purposes, the university will need to ensure that any electronic signature platform chosen to facilitate guarantee signatures is secure and offers robust security features (for example logins, or PIN numbers). This will enable the university to demonstrate that the electronic signature provides an ‘authenticating intention’ and also provides a proper record of liabilities undertaken.
The aim of the scheme will be to create a streamlined procedure whereby students can apply for assistance through the provision of a guarantee, the eligibility criteria can be assessed and approved, and the guarantee then issued to the landlord. Financial risk criteria such as maximum guarantee amounts should be factored in.
As mentioned above, the university will need to consider the extent to which it offers the arrangements as a direct service, or to outsource to third parties, including the insurer’s back office team.
If the work is outsourced, the university will need to ensure an appropriate service agreement is in place which clearly details the services that the third party will undertake, including in relation to its brokering of the insurance policy and its release of the guarantee agreement for signature. The university may consider making it a condition of the service agreement that any changes that the third party negotiates to the insurance policy are communicated to the university immediately, to allow the university to amend its agreements accordingly to minimise exposure.
The attraction of using an insurance product to mitigate the financial risk of offering rent guarantees is obvious. The challenge is to think through the standard policy terms devised by the insurer to ensure that the requirements of the scheme are deliverable and actually mitigate the anticipated risks. The smooth administration of a scheme is important for a higher education institution's relationship with its students and the local private rental sector.
With careful analysis of rent guarantee schemes on offer, and dialogue with insurers, student representatives and local landlords, universities are finding a way to offer significant assistance to their student body in a way that will enhance their reputation and their rankings in student satisfaction surveys.