So a private insurer (which knowingly insured a public entity) has the power to stop (or suggest) that a public investigation be HALTED?
It could be in the policy, but I do believe that public law (including one’s basic civil liberties) trumps private contracts. This clearly “impinges” (as lawyers like to say) on someone’s civil rights (the students’) and on the public’s right to know about its government and its functioning.