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Digital EditionNonprofit Insurers Ease Some Rates While Abuse, Auto and Casualty Costs Keep Climbing
Nonprofit organizations are seeing only partial relief from five years of steep insurance cost increases, even as the broader U.S. property and casualty market softens, according to Gallagher’s 2026 Nonprofit Sector Property and Casualty Insurance Market Update.
Specialized nonprofit carriers are competing more actively for new business rather than solely defending renewals, the report said, but conditions vary widely by risk type. Auto coverage remains a particular pressure point for nonprofits, with rates rising 7% to 15% amid frequency and severity of losses, including severe claims exceeding $20 million, Gallagher found. Many carriers will no longer write monoline auto policies, requiring nonprofits to bundle coverage with workers’ compensation or general liability, according to the report.
Casualty, Abuse Claims Remain Costly
Casualty and umbrella coverage remain the sustained driver of insurance stress for nonprofits, compounded by social inflation, so-called nuclear verdicts and third-party litigation funding, the report said. Many primary carriers have reduced umbrella limits over the past five years even as nonprofits seek higher limits, a dynamic Gallagher said is pushing insurers to unbundle primary and excess coverage, raising the cost of higher limits and potentially making them unaffordable.
Sexual abuse and molestation liability coverage remains especially difficult and costly to obtain, even for nonprofits without claims history, according to the report. Gallagher cited historic settlements exceeding several billion dollars in 2025 and noted that shifting jury sentiments, growing use of third-party litigation funding and the erosion of statutes of limitations for survivors are driving up defense and resolution costs.
Legislation passed or pending in at least a dozen states would bar nondisclosure agreements in child sexual abuse settlements, the report said. Carriers are reevaluating appetite for abuse risk within package policies, exploring claims-made structures, adding abuse-specific sublimits and tightening terms, according to Gallagher, even as a handful of new entrants have introduced monoline abuse coverage within the past year.
Foster care and adoption providers face some of the sharpest capacity constraints, according to Gallagher subject-matter experts cited in the report. Most carriers that historically supported the segment have stopped writing the risk over the past five years, leaving fewer than five standard admitted carriers willing to write or continue coverage. Remaining excess and surplus lines carriers are imposing shortened retroactive-date allowances, limiting capacity and raising premiums sharply, the report said, as states continue to loosen or eliminate statutes of limitations on abuse claims.
Property Gains Are Uneven, Cyber Stays Favorable
Sharp property rate reductions for catastrophe-exposed nonprofits do not extend across the sector, according to the report, because most nonprofits purchase package policies blending property with still-challenging long-tail liability coverage, making it difficult to isolate genuine property relief. Carriers continue to seek moderate rate increases in package policies and are requiring updated appraisals and tighter terms around agreed value clauses, replacement cost and inflation guards, Gallagher said.
Cyber coverage remains favorable for nonprofit buyers, with a rate outlook of -5% to flat as new entrants and existing carriers compete for business, according to the report. Most clients secured year-over-year decreases over the past two years through targeted marketing or early negotiation with incumbent carriers, Gallagher found, though ransomware and privacy litigation losses continue to rise, prompting insurers to make more targeted rate adjustments.
Management liability, including directors and officers and employment practices liability coverage, is performing well for many nonprofits and remains a target class with strong profitability and growth potential, the report said. However, large D&O carriers generally favor lower-exposure, administrative-type nonprofits over larger, more complex organizations such as large religious groups, higher education institutions and healthcare organizations, according to Gallagher.
California remains an especially difficult venue for employment practices liability, with frequent claims involving retaliation, harassment and failure to properly engage in the interactive process for medical issues, the report said.
Food banks are facing renewal challenges centered on auto and property coverage, with market appetite constrained by fleet size, travel radius and catastrophe-exposed locations, according to Gallagher’s food bank subject-matter experts. The marketplace continues to reduce capacity and impose sublimits or exclusions on sexual abuse and molestation, professional liability and auto coverage within food bank programs, the report said.
Obtain the full report here. &
