If you’re reading this, you probably already know about the the nonprofit insurance crisis and the problems that nonprofits like yours are facing with their insurance: Rising insurance premiums, poor coverage from commercial insurance carriers, and in some cases, the loss of coverage altogether. Many of these nonprofits have never made a claim. Going forward, it will be increasingly difficult for nonprofits to secure the insurance they require to keep their doors open.

Chances are, nobody’s ever explained to you the reason these problems exist, or the uncertain future that nonprofits face with their insurance as the the nonprofit insurance crisis continues.

In this article, I’ll explain all of this, and offer an elegant solution: A single investment that can help tens of thousands of nonprofits for decades to come, change the course of the entire nonprofit sector, and write history.

Why Are Insurance Rates Soaring for Nonprofits?

With the exception of fire-prone areas related to property, nonprofits’ risks generally haven’t changed much over the past decade.

The problem is not a frequency issue: The number of claims received has not gone up. That is remarkably stable.

So why do insurance rates keep going up for nonprofits? The short answer: Opportunistic attorneys, social and financial inflation, climate change, limited options for reinsurance, and legacy claims from the COVID-19 era.

Nonprofits Insurance Alliance (NIA) is the nonprofits’ own insurer, with a 35-year track record of success. NIA, the tradename for a group of nonprofit insurers (all of whom are nonprofits themselves), has been able to moderate some of these premium increases over the short term. However, NIA will only be able to continue to help more nonprofits and have the necessary long-term stabilizing effect the nonprofit sector needs if it receives a large infusion of surplus to take it to scale.

What Would Nonprofit Insurance Stabilization Look Like?

The answer is fourfold.

1. Lower Liability Insurance Limits

First, the community-based nonprofit sector generally must carry lower limits of liability insurance. Those higher limits that have been required in the past are like catnip to plaintiff attorneys. It would be better if one or two nonprofits fail because of a large jury award, than the entire nonprofit sector lose its ability to be insured.

Read the full article about the nonprofit insurance crisis by Pamela E. Davis at Blue Avocado.