State of the Insurance Market Report
2025 Initial Outlook and 2024 Wrap-Up
Nonprofit & Human Services
The nonprofit insurance market continues to experience volatility in the property, abuse, and umbrella lines. Carriers struggle with proper pricing to fund anticipated future claim costs. The trend to restrict umbrella limits continues, with carriers typically offering sublimits on abuse and professional liability. Several bright spots are flat to reduced pricing on cyber and competition returning to the management liability lines.
Risk Strategies continues to see carriers seeking rate increases through the first two quarters of 2024 as they struggle with the perceived inability to predict claim outcomes based on historical claim analytics. This was driven by continued large property loss events and unpredictable court verdicts.
Carriers are concentrating on correct valuations of the replacement cost of buildings, especially in programs with blanketed limits. In many instances, carriers are performing their own replacement cost calculations and requiring clients to use these evaluations on renewal. While some carriers will forgo a rate increase in these instances, others may mandate an increase.
We recommend that nonprofits reevaluate property values themselves, through professional appraisals to control this exposure and ensure insurance policies cover at least 80% of the property value.
Carriers continue to increase rates due to a perceived inability to forecast future claim settlements based on historical claim analytics.
Additionally, higher premiums mitigate the risk of litigation losses. While we see rate modification in the general liability line, we also observe carriers adjusting rates for abuse and professional liability coverages.
Umbrella liability continues to see rapidly rising rates, as carriers perceive this line of coverage to be actuarially complex to predict. The recent trend in massive jury awards and settlements in both auto and general liability has umbrella underwriters reevaluating their entire books.
More troubling is the trend for carriers to offer lower limits to clients on renewal. Carriers offer a maximum of $5M in limits to middle market accounts, and sub limiting the abuse and professional lines to $2M to $3M in total.
Auto liability rates range from 5% to 25% depending on the location and makeup of the fleet. For example, any nonprofit that transports clients or patients faces increased scrutiny over their operations and should expect substantial rate increases again in 2025.
Two bright spots for nonprofit clients are in the management liability and cyber lines.
Nonprofit directors and officers (D&O)/employment practices liability (EPL) policies have seen competition return for accounts with limited claim activity, with flat or reductions in pricing on renewals. More encouragingly, carriers are offering reductions in retentions to secure accounts.
Cyber liability renewals are coming in flat, or in some cases, with slight reductions, even more remarkable given all the publicity around claim activity.
Given the approach carriers are taking in underwriting the property and umbrella liability lines this year, we would expect to see a return to normalized underwriting in 2025.
Nonprofit & Human Services Insurance Rate Forecast |
||
| Property - Average Risk: |  |
+10% to +25% |
| Auto: | |
+5% to +25% |
| General Liability: | |
+3% to +25% |
| Abuse and Professional: | |
+15% to +20% |
| Umbrella: | |
+20% |
| Cyber: | Flat | |
| Management Liability: | Flat to +10% | |
Take a proactive approach to risk management.
Focus on better claim oversight and working closely with insurance carriers.
Make loss control key and include trend analysis, onsite inspections, and program policy review.
The nonprofit and human services industry is one of caring and compassion. There are also unique complexities that can be challenging.
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Our industry and product line specialists have collaborated to provide an update on current trends and market conditions. We invite you to explore their insights by downloading our latest State of the Insurance Market Report.