Author: Ian Ackerman
Effective risk management plays a pivotal role for nonprofit organizations seeking to control their total cost of risk (TCOR) while safeguarding their operations, assets and mission. Navigating the insurance marketplace strategically can set nonprofits apart, especially during challenging market cycles. Here we share key strategies to help you win the nonprofit insurance game.
1. Understand the nonprofit insurance marketplace
Nonprofit insurance differs significantly from the broader market. To thrive, partner with a broker that comprehends the nuances of this specialized sector. Regular updates on changes and challenges, such as obtaining Abuse and Molestation and Professional Liability limits, are essential. A knowledgeable broker will guide you through the unique landscape, risks and specialized coverages.
2. Develop a strategic approach
Start early by conducting renewal strategy meetings four to five months before renewal. Review risk profiles, coverage needs and any operational or exposure changes. Identifying challenges early allows proactive adjustments before insurance carriers begin underwriting. A well-thought-out strategy ensures better outcomes during renewal.
3. Provide accurate underwriting data
Accurate exposure information is critical. Carrier's price on risk and poor data automatically push underwriters to be concerned and conservative in their pricing approach. Ensure precise details on employee counts, vehicles, annual budgets and other relevant factors. Carriers closely scrutinize property statements of value (SOV) to verify that property values account for inflation adjustments. Reliable data enhances your negotiating position and overall risk management.
4. Communicate effectively
Maintain open communication throughout the underwriting process. Transparency reduces surprises and uncertainties during renewal. Regular updates between your organization, broker and insurance carriers foster an effective partnership. Effective communication builds trust and ensures alignment with your insurance goals.
5. Leverage technology
Water-related property damage is a common risk. Consider installing water and temperature change detection Internet of Things (IOT) devices. Technologies that help you to better protect your assets and employees are evolving every day. Stay on top of those trends. Many insurance carriers offer these devices at no extra cost. Early detection prevents extensive damage, reduces claims and enhances overall risk mitigation.
6. Implement driving risk management
Driving risks represents one of the largest exposures carriers have, and they've struggled to profitably write this line of coverage for years.
Be proactive in your approach. Collaborate with preferred telematics vendors to improve safety and reduce insurance costs. Monitoring device use allows carriers to assess risk more accurately. Telematics data informs decisions, leading to better risk management. Enact specific driver eligibility criteria, actively monitor motor vehicle records (MVRs) throughout the calendar year and provide ongoing driving training both virtually and in person/on the road.
7. Analyze exposure changes
The story of the day isn't always the total premiums. Compare expiring premiums to renewal exposures. Understand cost fluctuations — whether rate driven or exposure driven. This analysis informs negotiation strategies and helps you secure the best insurance terms.
8. Foster a safety culture
Establish safety committees within your organization. Invite your broker and insurance carrier partners to participate. Regular safety meetings create a culture of risk awareness and prevention. Adjust the meeting frequency as needed to maintain momentum.
Remember, the insurance landscape is dynamic. Stay informed, plan ahead, communicate effectively and manage risk proactively. These practices not only control your total cost of risk but also contribute to your organization's long-term success. By following these strategies, you'll emerge as a stronger nonprofit organization in the insurance game.
