Managing the Costs of Nonprofit Insurance
Will 2020 be your "Reset Year?"
If you are the leader of a nonprofit organization, you already know too well the wide range of challenges you face this year. “How can we continue to deliver on our commitment to our mission? How can we adhere to safety protocols for our employees and volunteers amid the COVID 19 environment? How can we keep everyone involved safe? How can we keep donor retention high, and operational costs low?”
One of those costs, that of insurance, is expected to change significantly this year.
According to the Wall Street Journal, insurance companies have raised prices aggressively following several years of large catastrophic losses and continued low interest rates, which have weighed on their investment returns. They also face mounting pressures to raise insurance rates to offset the reductions they offered to stay competitive in the years in which claims were low. According to the article, “The Children’s Center, a nonprofit in San Antonio… received a renewal quote of $750,000” or a 326% increase over its prior year costs. Factoring in new pandemic claims does not help, with industry estimates of COVID-related insurance claims exceeding $80 billion according to the Daily Business Review.
The trend in premium increases is accelerating, and is likely to broadly affect businesses and organizations regardless of individual performance.
What can organizations do?
One way that nonprofit entities have found insurance premium relief is by working with a specialist insurance advisor that understands their business and the unique challenges facing nonprofit organizations. Such an advisor can help you manage your overall risk exposure and cost of insurance by performing a thorough review, but also may have access to nonprofit-specific products that can be cheaper while in many cases offering better coverage.
Why you should consider working with a nonprofit-focused insurance advisor:
- They may have access to nonprofit-specific insurance products that will save your organization money while offering better, more specialized coverage. That same nonprofit in San Antonio, facing a $750,000 renewal, ultimately ended up buying coverage from an insurer that specializes in nonprofits for $315,000.
- The risk profiles for nonprofits are changing. There are fewer volunteers onsite, therefore less likelihood of medical liability. There are a lower number of miles driven in vehicles used in the mission of the nonprofit. Employees are working fewer hours, and mostly from home. This change in overall risk profile needs to be reflected in premium calculations.
- Workers Compensation programs are significantly affected, as they are tied primarily to payroll figures – less work means less exposure. Fast-paced changes suggest that an organization may want to take a closer look at a “pay as you go” program.
- Conduct exclusions regarding the “action,” or “inaction” of Directors and Officers are now more relevant than ever as organizations are expected to adhere to the CDC guidelines on COVID control. A careful review of policy wording, and coverage availability is very important.
- With more employees working from home, more confidential data is passed via computer, email, and file-sharing. A review of Cyber Security coverage can help an organization better understand and mitigate these risks.
- Many nonprofits depend on volunteers, some who help on a consistent basis and others just once. Both are integral to the organization and appreciated, yet each is more prone to injury than full-time employees as they are not as familiar with policies, procedures, and surroundings. The added risk of navigating automobile donations, etc. adds another level of complexity, and proper liability protection should reflect the range of such exposures.
- Maintaining proper sanitary conditions and social distancing for volunteers and clients in the Covid-era presents an entirely new set of challenges as well. “Are we instructing proper use of personal protection? Are we exposing our volunteers to additional risk of contracting the virus? Can we keep our clients safe as we seek to help them?”
Carrying appropriate insurance coverage for these risks and exposures while keeping the price within your budget is presenting a greater challenge in 2020 – a proper evaluation of your organization’s risks within this new landscape is highly recommended, and could reduce your organization’s insurance costs substantially.
It is important that a nonprofit engage a trusted insurance advisor for a review and explanation of the coverage it needs. According to riskandinsurance.com, “41% of nonprofits cited confusing policies as a reason they would not select certain coverage.”
Reese Yeatman Insurance has had great success helping our clients save money while maintaining effective coverage, in some cases reducing premiums by as much as 40%. As you continue to work your way through 2020 and an increasingly uncertain environment, make sure your organization obtains a good “reset” for the road ahead by consulting with a nonprofit insurance expert.
Contact Reese Yeatman Insurance today to discuss your nonprofit’s insurance program.