Today we are going to talk about how nonprofits can navigate today’s insurance market.
The current “hard” market, as we call it, is the troubling up side of the insurance cycle that typically swings back and forth with the down side or “soft” market. This current hard market has been much harsher than in the past, in terms of the impact on Nonprofit Human Service organizations.
These conditions continue to worsen, and most businesses like yours have experienced these types of consequences:
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Exorbitant policy cost increases – both direct and indirect costs
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Loss of coverage – insurers scaling back limits of liability, increasing deductibles, and adding policy restrictions and exclusions
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There are increased eligibility standards, with more stringent underwriting, and additional safety and property compliance requirements
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And the performance of insurance carriers has resulted in many exiting the industry, dropping classes of business, or even going into financial distress
These conditions impact all aspects of your organization:
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Operations and programs
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Employee recruitment and retention
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Auto fleets and property management
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Strategic planning – what operations or new programs to continue or add?
How can you manage this challenging environment and survive, or even thrive?
The best practice is to use deliberate, proactive risk management strategies and tactics to position your organization for opportunities to improve your insurance costs and coverage.
First, you should lower your risk profile: to be more attractive to insurers and increase your ability to negotiate rates and coverage needs. Tactics to do this include:
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Reducing or eliminating certain exposures
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Instituting mitigation measures for incidents that do happen
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Shifting risk to other parties via contractual risk transfer
Secondly, prioritize your exposures: determine areas in which you may be able to assume more risk, those that you can transfer or mitigate, and which high risks require the expense of purchasing first dollar or higher limit insurance. You may be able to:
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Take higher deductibles on property and auto
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Establish redundancy or business continuity strategies
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Be selective about coverage terms & conditions when purchased
Lastly, work with an experienced insurance professional that will partner with your organization, to implement the strategies and tactics described. Once your risk profile is minimized, and priorities established, an independent agent can help construct an RFP that paints the best possible picture of your business, to shop around for the best price and coverage to suit your needs.
You should consider an agent that is an advisor and advocate for your organization, that understands and communicates the nuances and unique attributes of your particular business; and is an expert in Professional liability, Abuse & sexual misconduct, Cyber Risk, D&O, and emerging risks of your industry.
You should engage an agent that represents the best and broadest selection of insurance companies. As carriers come and go in this space, you want a specialist who can vet the best long term insurance partner for your needs.
Ultimately, you want your organization to Be Ready, for the rough seas you encounter in the cyclical insurance market. So from me, Bob Cottone at Rue Insurance, I wish you smooth sailing, and look forward to helping you steady your ship.
Image by Cottonbro on Pexels
About the Author:
Bob Cottone joined Rue Insurance in 2000, bringing 15 years of experience including commercial underwriting, independent consulting, and success as a partner with private and public brokers. He is dedicated to designing and implementing cost effective risk management programs for clients, particularly those in Healthcare, Technology, and Human Service Organizations. He holds the Accredited Advisor in Insurance designation (AAI), and is licensed in multiple states.
Bob focuses on specialties in Professional Liability, Privacy/Data Breach/Cyber Liability, and Directors & Officers Liability. He has authored articles and presented a variety of workshops and seminars in his area of expertise, and is also very experienced with implementing and facilitating Safety Committees for larger organizations.
