An Industry that Gives: Learn the Truth About Commercial Insurance’s Charitable Side

Insurance industry financial resources and human capital are stalwart contributors to social wellbeing.

By: Abi Potter Clough | April 1, 2022

Topics: Insurance Industry | Mar./Apr. 2022 Issue

At its heart, insurance is a system designed to help people in need. When the worst possible things have happened in history, people have come together to survive and help each other thrive. This very basic human value is entrenched in what insurance does every day — whether it’s responding to a catastrophe or providing coverage for more day-to-day exposures.

“The insurance industry designs products and services to assist people in a time of need, and philanthropy is a natural extension of this work,” said Bill Ross, CEO, Insurance Industry Charitable Foundation (IICF). “On an even larger scale, our industry provides the backbone for innovation, growth and creativity that drives growing and successful economies. When you’re confident that your risk is managed, greater creativity results and fuels innovation.”

“The U.S.’s insurers provide financial security and peace of mind to millions of Americans while also being one of the U.S. economy’s most significant employers, investors, and taxpayers. On top of everything else, insurers allocate more than half a billion dollars annually to charitable causes,” said Sean Kevelighan, CEO of the Insurance Information Institute.

During this pandemic, that included premium refunds to drivers who drove less, and food insecurity drives that netted millions for hungry children around the world. As of June, 2020, the Triple-I estimated that insurers donated $280 million to the fight against Covid. That number has surely grown in the interim.

Philanthropy as a Core Value

Most major carriers have established a charitable foundation to channel their efforts. In many companies, employees are encouraged to volunteer time and talent through paid volunteer days and matching donation programs.

“At Amwins, we raised more than $6 million and donated more than 71,000 volunteer hours for charitable causes through our 2021 Summer of Service program, an initiative encouraging staff from across the nation to give back through volunteering projects and fundraisers,” said Barbara Bufkin, a senior advisor with Amwins.

Bufkin, a former IICF International Board of Governors Chair, provided a thumbnail sketch of its philanthropic work: “With philanthropy as a north star guiding our industry, we have been able to make a real difference and improve lives through volunteerism, scholarships and charitable donations.”

Sometimes corporate charitable giving programs even align with risk management strategies, like using natural ecology to reduce the impact of floods.

Laura Crossin, senior vice president of human resources at Philadelphia Insurance Companies, said: “We’ve been partnering with the Arbor Day Foundation to plant 80,000 trees each year in forests and communities in need since 2015. Since the beginning of the partnership, we’ve been able to fund the planting of 480,000 trees.”

The IICF was established in 1994. By combining the efforts of various organizations into one large collective, the IICF has contributed $42 million in community grants and over 300,000 in volunteer hours to charitable causes.

With year-round volunteer opportunities and its annual Week of Giving, the IICF presents unique and valuable ways for insurance professionals to give back.

Ross said, “IICF provides a broad platform for the insurance industry to unite to make an even greater collective impact on societal issues and amplify our work in the community. We want everyone in the industry to become IICF supporters, making the greatest impact possible through the strength of so many companies and individuals contributing together.”

Philanthropy in a Pandemic

The pandemic changed everything in our world, including the way we volunteer and give back. Lockdowns and public health restrictions made it impractical to volunteer in person.

“In the early stages of the pandemic, nonprofit organizations were not hosting volunteers as they had in the past and many companies had a work-from-home policy. As a result, companies developed virtual volunteering activities,” said Melissa MacDonnell, president, Liberty Mutual Foundation.

“In fact, in an effort to further these efforts, the IICF compiled a list of resources to volunteer from afar.”

In addition to going virtual with volunteer opportunities, some organizations turned their lens to local communities during the pandemic.

“Along with a greater emphasis on virtual activities, we also worked to build awareness of the persistent issues in our communities, such as food insecurity and homelessness,” said Jim Shevlin, chair, IICF Atlanta Chapter and EVP and regional executive officer for Chubb’s Southeast Region.

Shevlin continued, “Part of this effort has been focused on directing the IICF giving initiatives toward nonprofit partners based in our local communities, where IICF grants make a significant and positive impact to them, and help these organizations serve a greater number of community members in need.”

While some parts of the world have returned to in-person events, charitable giving and volunteer opportunities may remain a hybrid mix of live and virtual opportunities. The local focus many organizations adopted during lockdown may continue as the benefits of helping communities where employees live and work are numerous.

Philanthropy’s Talent Angle

New college graduates and younger workers have more job options and opportunities than ever. And one thing they are looking for is meaningful experiences at work.

To be an employer of choice means providing more than a competitive salary and benefits package. Employers need to commit to advancing important social issues.

MacDonnell said, “We live in an environment where employees care deeply about a company’s commitment to social issues, with younger generations wanting more from their employers. According to the 2022 Edelman Trust Barometer, 60% of all employees choose a place to work based on their beliefs and 64% invest based on their beliefs and values.”

Philanthropy isn’t just good for our communities; it’s a good business investment.

Most companies have diversity, equity, and inclusion (DEI) goals and initiatives—and philanthropy is one way to support DEI goals. By supporting charities with time and money, companies show commitment to advancing DEI initiatives.

“So many of our industry’s philanthropic initiatives play an instrumental role in advancing DEI. The apprenticeship programs are just one example where companies are looking outside traditional sources for talent, introducing new individuals to a career in insurance and offering resources to develop the skills needed to advance,” said Ross.

Other ways to grow DEI initiatives through philanthropy include Lloyd’s global Dive In Festival, INROADS internships, and affiliation groups like NAAIA.

Giving back and helping others are core values of every insurance organization. Philanthropy is one way insurance takes these values to heart through donations of time, talent and treasure.

The insurance industry’s commitment to philanthropy is something to be proud of and it can only expand in years to come. &

Abi Potter Clough, MBA, CPCU, is a keynote speaker, author and business consultant focused on Insurtech, leadership and strategy. She has over 15 years of experience at a Fortune 500 company with expertise in P&C claims operational leadership, lean management consulting, digital communications and Insurtech. As the past chair of the International Insurance Interest Group of the CPCU Society, Abi remains involved in many international initiatives and projects. She has published two books about change management and relocation. Abi can be reached at [email protected].

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.