Churches across America face insurance turbulence

Churches are battling to obtain affordable insurance cover as insurers rethink their taste for the religious institutions space.

Downgrade-hit Brotherhood Mutual and under review Church Mutual have been shrinking their appetites and shying away from loss-laden religious institutions. And the specialists aren’t alone in looking to trim down their business, insurance brokers told IBA.

Insurance agencies have been fielding calls from clients regarding Nationwide, also said to be rethinking the amount of church business it takes on. State Farm’s exit from “some areas” has also had an impact, insurance brokers said.

“We are certainly in a concerning time right now, with Brotherhood being downgraded, State Farm having left some of the areas and also having their issues, and then we’re looking at Church Mutual and holding our breath, hoping that they’re able to maintain their AM best rating,” said Kerry Dantzig (pictured top, right), Heffernan SVP and a religious institutions insurance specialist.

Carriers inundated with church insurance requests amid Church Mutual waiting game

Carriers including GuideOne, AmTrust and Great American continue to play an active role in the space. But they are being “inundated” with applications, California-based Dantzig said.

Some clients that have hopped from Brotherhood Mutual, which swapped its A- (excellent) AM Best rating for a B++ (good) in April, have landed with Church Mutual.

Should the insurer, which has denied speculation it could be gearing up for a sale, fail to turn things around to the rating agency’s satisfaction then brokers and clients could again be left scrambling. Church Mutual insures more than 100,000 churches and other religious institutions across America. Brotherhood insures around 65,000, as per its website.

“Some may have moved over to church mutual and now they’re wondering if they’re in the right spot, and so it is a wait and see,” Dantzig said. “I would say to churches – get ahead of it, if you’re with Brotherhood or you’re with Church Mutual look at your options but give the insurance broker enough time to get out there.”

Father and daughter duo Kerry Day (pictured top, left) and Kera Day (pictured top, center) have witnessed a supply and demand imbalance as insureds look to obtain cover.

“The other insurance companies are seeing an influx of churches coming to them wanting coverage,” Kera Day, World Insurance Associates (World Insurance) commercial lines account executive, told IBA. “And now they’re saying, well hold on, we can’t write everybody.”

“Brotherhood Mutual, because of the downgrades, are now just dumping businesses – you’re seeing an influx of business hitting the marketplace,” said Kerry Day, American Insurance Marketing Corporation president. “The ones that they’re offloading are the ones who’ve had the claims.

“Some of the claims, they’re not bad, they’ve fixed them, they’ve dealt with whatever the issue is, so it shouldn’t happen again anytime soon, but that doesn’t matter.”

Accounts are being driven towards excess & surplus (E&S) lines markets, Kerry Day said. Admitted insurance carriers are “cherry picking”.

Churches stuck in a “tough position”

“That really puts a tough position on the church budget,” Kerry Day said. “If you’re paying $20,000 and now you’re paying $60,000 or $70,000, that’s a huge hit.”

Some religious institutions in catastrophe prone states like Florida have been pushed towards self-insuring when it comes to wind, Kerry Day said.

Some of the challenges churches face – natural catastrophe and weather hits, cyberattacks, social inflation and construction and auto repair costs – are hurting non-profits and businesses across America.

Others are more niche. Churches have been hit with non-recent abuse and molestation claims. Slip and fall claims from elderly attendees also threaten an impact.

“I can get a carrier to do the property and the liability, but I can’t get a carrier to do the sexual misconduct, the D&O [directors & officers], the ministers’ counseling,” said Kerry Day. “They’ll take the church building [in areas that are less catastrophe prone], but that’s not the whole piece – the church needs those other coverages, and that’s where the problem lies as well.”

Got a view on the church insurance state of play? Leave a comment below.