Nonprofits Serve a Crucial Function. Meet an Alliance Dedicated to Keeping Them Covered

In a society that, at times, can feel like it’s consumed by greed and self-interest, nonprofit organizations serve as a bright reminder that there are honorable forces at work in the world.

These organizations represent the very best of us, serving those who can be forgotten, protectors of those who need it most. In many ways, their work is essential, most definitely for those that depend on them.

But the hurdle that many — if not all — nonprofits face is the task of securing necessary insurance coverage; the very component of a business that is necessary for its survival and function.

These organizations knock on the doors of insurance carriers, looking for both the usual coverages, like property and liability, but also niche coverages, depending on the nature of the nonprofit’s mission. This can make for unique risk profiles.

Scott Konrad, senior vice president and nonprofit practice leader for HUB International, shared his insights and expertise on the nonprofit and commercial insurance space. He said the risk profiles of nonprofits “are usually more complex than they look.”

“Nonprofits are anything but plain-vanilla mainstream businesses,” he continued. “They’re providing human services, arts, or cultural outlets, making grants, or engaging in international relief and development.”

The last two years, and several quarters, have provided not only a shifting, hardening insurance market, but a difficult environment for nonprofit organizations that seek to remain solvent. As COVID-19 limited the quantity of in-person events, nonprofits lost one of their key revenue generating activities.

As compared to for-profit businesses, nonprofits also tend to have limited risk management resources and risk-transfer options.

“Nonprofits, unlike for-profit businesses, really have a unique challenge because they don’t have the financial flexibility to adapt to a market shift,” Konrad said. And with a market shift comes rising premiums; premiums that nonprofits can struggle to afford.

With a market shift being felt by all sectors, nonprofits are left with not only higher insurance costs, but are “usually paying more for less protection, if they can get it,” according to Konrad.

“From my perspective, it’s not so much an availability question, but an affordability question,” he said.

If nonprofits find themselves stuck in the cycle of hard markets and rising premiums, with an already particular set of risks that make acquiring insurance challenging, not being able to secure the coverage they need could be detrimental to the point that it could threaten the existence of the organization.

It’s these scenarios — and these troubles — that allowed the seeds of the Nonprofits Insurance Alliance (NIA) to sprout and grow.

Founded by Pamela Davis in the mid-1980’s, the function of the group is to “provide a stable source of reasonably priced liability and property insurance tailored to the specialized needs of the nonprofit sector,” per its mission statement.

NIA works to ensure that securing insurance coverage without going bankrupt is not a worry that nonprofits must endure.

Risk & Insurance® has partnered with NIA to construct a series of stories around nonprofit organizations that struggle to find the coverages they needed to survive as well as showcasing the challenges they’ve faced in the commercial insurance space.

This series emerges as the U.S. Senate Committee on Banking, Housing, and Urban Affairs launched a hearing in September titled, “Current Issues in Insurance.” Nonprofit organizations and their sometimes strained relationship with the insurance industry were one of the areas discussed in that hearing.

Soon, we’ll begin publishing the individual stories of nonprofits set in different parts of the U.S., that serve niche communities. What will remain the constant throughout? The consciousness of these nonprofits’ unwavering desire to support others, and how NIA makes it possible. &