Churches Across America Face Insurance Turmoil | Insurance business America
It’s a “worrying” and costly time for religious institutions, brokers say
Insurance News
By Jen Frost
Churches are struggling to obtain affordable insurance coverage as insurers reconsider their preference for the religious institutions sector.
The downgrade of Brotherhood Mutual and the currently under-audit Church Mutual have curbed their appetites and are wary of loss-making religious institutions. And the specialists are not the only ones trying to downsize their business, insurance brokers told IBA.
Insurance agencies have been fielding calls from customers about Nationwide and are also reportedly reconsidering the scope of church business they cover. State Farm’s exit from “some areas” also had an impact, insurance brokers said.
“We’re in a worrying time right now with Brotherhood being downgraded, State Farm having exited some areas and also having their problems, and then we look at Church Mutual and hold our breath hoping that they’ll be able to do that “To maintain their top AM rating,” said Kerry Dantzig (pictured above right), Heffernan SVP and religious insurance specialist.
Carriers are inundated with insurance inquiries from churches during Church Mutual’s waiting game
Vendors such as GuideOne, AmTrust and Great American continue to play an active role in this space. But they are being “inundated” with applications, California-based Dantzig said.
Some customers who switched from Brotherhood Mutual, which traded its “A-” (excellent) “AM Best” rating for a “B++” (good) rating in April, have landed at Church Mutual.
If the insurer, which has denied speculation that it is preparing to sell, fails to turn things around to the ratings agency’s satisfaction, brokers and customers could find themselves in trouble again. Church Mutual insures more than 100,000 churches and other religious institutions across America. Brotherhood insures about 65,000, according to its website.
“Some may have moved to a church mutual and are wondering if they’re in the right place, so it’s a case of waiting,” Dantzig said. “I would say to the churches: take it a step further. If you work at Brotherhood or Church Mutual, explore your options, but give the insurance broker enough time to get there.”
Father-daughter duo Kerry Day (pictured above, left) and Kera Day (pictured above, center) have experienced an imbalance between supply and demand as those insured seek coverage.
“The other insurance companies are seeing an influx of churches reaching out to them wanting coverage,” Kera Day, commercial lines account manager at World Insurance Associates (World Insurance), told IBA. “And now they say: Wait a minute, we can’t write to everyone.”
“Brotherhood Mutual is just dumping business now because of the downgrades – you’re seeing an influx of business coming into the market,” said Kerry Day, president of the American Insurance Marketing Corporation. “The people who outsource them are the ones who had the claims.
“Some of the claims aren’t bad, they fixed them, they took care of the problem, so it shouldn’t happen again anytime soon, but that doesn’t matter.”
According to Kerry Day, customers are being driven towards the Excess & Surplus (E&S) lines markets. Approved insurance carriers engage in “cherry picking.”
Churches are in a “difficult situation”
“This really puts the church budget in a difficult position,” Kerry Day said. “If you paid $20,000 and now you pay $60,000 or $70,000, that’s a big hit.”
Some religious institutions in disaster-prone states like Florida have been pushed to become self-insured for wind, Kerry Day said.
Some of the challenges churches face — natural disasters and weather events, cyberattacks, social inflation, and construction and auto repair costs — are hurting nonprofits and businesses across America.
Others are more niche products. Churches have been hit by non-recent allegations of abuse and harassment. Older participants are also at risk of slipping and falling injuries.
“I can hire a carrier to take over the property and liability, but I cannot hire a carrier to take over the sexual misconduct, the D&O [directors & officers], advising ministers,” said Kerry Day. “They will take over the church building [in areas that are less catastrophe prone]But that’s not all – the church needs these other safeguards, and therein lies the problem.”
Do you have an overview of the status of church insurance? Leave a comment below.
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2024-05-10 15:58:35
www.insurancebusinessmag.com
