Author: Peter Persuitti
As we update you about insurance challenges and market trends for nonprofits, we always have to caveat the many contextual elements of our observations — the third sector has a broad array of human services and volunteerism that makes it difficult to apply any trend to all nonprofits. Our focus in this update are the vital services that nonprofits provide to areas we specialize in — affordable housing and homeless shelters; adoption and foster care; mental health; youth-serving organizations including camps; the intellectual and developmental disabilities (IDD) community; community clinics (action agencies); and non-governmental organizations (NGOs).
We add to that complexity the many differing jurisdictions in the US, some of which are moving quickly to remove any charitable protections for nonprofits, such as the statute of limitations on abuse reporting.
Insurance challenges nonprofits are facing
Perhaps the most striking trend is that many nonprofit specialist carriers haven't renewed coverage over the past two years for certain classes of nonprofits or organizations with losses. We often hear that "insurance is the oxygen of the economy," and we feel it in so many ways for nonprofits whose insurance premiums are skyrocketing, while Casualty/Umbrella limits have been significantly reduced or tripled in price, if you can get them.
All these trends threaten charitable organizations existence and ability to continue their impact. There's no mission without margin, the late writer Peter Drucker would often say, and nonprofits are facing unprecedented times as insurance costs increase — both for Property and Casualty (P&C) and for benefits — and they contend with other threats such as talent shortages, increased retirements and funding cuts.
Gallagher offers innovative solutions
At Gallagher, we're marshaling our talent across our broad continuum of services: retail and wholesale brokerage, P&C, health and wellness, specialty underwriting programs, claims administration and advocacy, alternative risk financing, risk control, HR consulting and reinsurance. We're leveraging our data analytics and specialization to create new solutions both in the admitted and surplus lines worlds. We're encouraging nonprofits to come together to pool risk, giving them both a spread of risk as well as economies of scale. We're mobilizing our risk control specialists to help our clients demonstrate superior duty of care. And we're focused on what we call "risk profile": we present our nonprofit clients to the underwriting community in a unique organized and focused manner. We're starting the process earlier, we're seeking secondary and tertiary data elements, and we're making it easier for underwriters to assess a desirable risk.
We don't see any reprieve on the horizon for these vital nonprofits, but we're encouraged by the movement to pooling and alternative risk financing strategies.
We at Gallagher faced these headwinds more than 50 years ago when we first specialized in helping Roman Catholic dioceses and archdioceses in the US whose coverage was cancelled, by using pooling, captives and risk retention groups — solutions that today are thriving and continue to bring stability and a profit-center mindset that no longer depends on insurance per se. And today we're supporting this group around the world, including bringing together all the dioceses in New Zealand after the Christchurch earthquake.
In conclusion, the challenges facing nonprofits in the current insurance landscape are significant and multifaceted. However, at Gallagher, we're committed to leveraging our extensive expertise and resources to support these vital organizations. By fostering innovative solutions such as risk pooling, alternative risk financing and enhanced risk control measures, we aim to provide nonprofits with the tools they need to navigate these turbulent times.
Our historical success in creating stable and sustainable insurance solutions for religious organizations serves as a testament to our ability to adapt and thrive in challenging environments. As we continue to support nonprofits globally, we remain dedicated to ensuring they can maintain their crucial impact on communities worldwide.
Recommended resources
"Executive Actions and Their Impact on Charitable Nonprofits," a recorded YouTube webinar on hosted by the National Council of Nonprofits
National Council of Nonprofits homepage
