Universal child care rollout reshapes risk and insurance considerations for providers

John Smith ; 2025-11-25 16:15:54

Expansion pressures expose facilities to evolving safety and staffing challenges

Insurance News

By Gia Snape

Dec 02, 2025Share

New Mexico’s launch of the nation’s first universal child care program is reshaping the operational and risk landscape for child care providers, prompting insurers and brokers to prepare for a wave of new exposures.

With demand expected to surge as families gain access to no-cost infant and toddler care, providers across the state are expanding capacity, upgrading facilities and onboarding new staff at a rapid pace. Those shifts are creating “a very dynamic risk environment,” said Allison Elzer (pictured), managing director of risk solution services, at Markel.

“New Mexico is moving from a relatively standard system to one that includes additional types of child care services,” she said. “We’re seeing licensed centers, licensed homes, and newly registered homes all brought under the same umbrella of funding and oversight. Each of those comes with different exposures that we need to understand.”

Expanding the child care provider landscape

Since November 1, New Mexico has made child care available to all residents. The state slashed income eligibility requirements for its child care assistance program and continued waiving family copayments. Families can access these benefits through the state's Early Childhood Education and Care Department (ECECD).

Under the new model, licensed centers and licensed home-based programs (i.e., those caring for four or more children) will now be joined by registered homes, which can care for up to four children. That shift means more inspections, more training, and potentially significant facility upgrades.

“The state is going to have entities coming in, evaluating locations, and confirming they meet new standards,” Elzer said. “We anticipate that some providers will be required to upgrade playgrounds, fencing, latching mechanisms, surfacing… physical things that are critical to safety.”

New Mexico is offering grants and low-interest loans to help providers modernize facilities, but not all operators may qualify. For insurers, the uncertainty around which providers can meet these new standards is a central concern.

From Markel’s standpoint, Elzer said, “We need to know that the provider can manage a facility safely. Our team works directly with insureds to help them understand what good risk mitigation looks like, but the pace of change in New Mexico means some providers will be climbing a steep learning curve.”

The state expects to add 5,000 early childhood professionals to meet demand, creating new workforce and supervisory risks.

“Turnover is already one of the biggest exposures in child care,” Elzer noted. “When you bring in new people quickly, you risk gaps in training and oversight. Historically, incident frequency increases whenever a facility has a large number of new staff.”

Providers will need to closely monitor child-to-teacher ratios, which may tighten as enrollment grows. And as some operators look to expand their footprint to accommodate additional children, construction and renovation projects will introduce further exposures, including contractor risk and compliance issues.

Child care risk management: Facility safety remains front and center, but emerging risks abound

Even with structural support from the state, child care providers still face traditional liability issues, particularly around playgrounds and internal safety systems. According to Elzer, playground surfacing depth, gate-latch mechanisms, and door controls remain hotspots for claims.

Another sensitive but critical area is abuse risk. Abuse coverage is commonly excluded across the care sector, and child care is no exception.

“It’s essential for operators to understand what is and isn’t covered,” Elzer emphasized. “Thorough background checks (on staff) and training are key to reducing these risks.”

One of the most commonly underestimated risks for these facilities, however, is cyber liability. As more providers adopt digital enrollment systems, communication apps, and automated billing tools, exposure to data breaches and privacy incidents grows.

“Most child care providers don’t think of themselves as cyber targets,” Elzer said. “But with expanded access and technology-driven systems, personal data risk absolutely increases.”

Insurance market tightens around a complex segment

Child care has long been a challenging class for insurers. “To write this business well, you need a deep understanding of the licensing structure, the physical exposures, the abuse exposures,” Elzer said, noting Markel’s extensive experience insuring this segment. “We rely on touchpoints throughout the policy period to make sure programs remain strong.”

That support will be increasingly important as New Mexico’s model matures and if other states follow suit. Elzer warned that as state standards become more prescriptive, courts may begin to treat them as the “new normal,” even for providers outside those programs. “If state-funded providers are held to higher standards, others could find themselves measured against the same expectations, which could introduce liability," she said.

For operators preparing to scale up, Elzer offered several recommendations:

Strengthen onboarding protocols. “Don’t start staff before they’re fully trained,” she said.
Prioritize facility maintenance. Fix broken gates, locks, and playground surfaces immediately.
Use checklists and audits. Structured oversight helps reduce common safety lapses.
Evaluate cyber needs. Coverage gaps here can be costly and are often overlooked.
Leverage state programs. “Take advantage of training and business support,” she said. “These resources can help stabilize operations during rapid change.”

As universal child care takes root in New Mexico, insurers and providers alike will be navigating unfamiliar terrain. But with strategic risk management and sustained investment in training and safety, providers can position themselves for long-term success in this evolving landscape.