When Insurance Wouldn’t Back This Mental Health Nonprofit, the NIA Stood Up to Fill in the Gap

Oregon-based nonprofit organization Albertina Kerr’s exposure profile became too risky for its previous insurer. That’s when NIA stepped in.

By: Emma Brenner | January 11, 2023

A nonprofit organization’s quest to find affordable and adequate commercial insurance coverage is no easy feat — which is why Nonprofits Insurance Alliance (NIA) was founded.

In this series, Risk & Insurance®, in collaboration with NIA, spoke to five nonprofit organizations — all with out-of-the-ordinary risk profiles and inspiring stories — to discuss the hurdles that come with securing necessary coverage at an acceptable price.

We spoke with Matthew Warner, chief people and administration officer of Oregon-based organization Albertina Kerr, to learn more about the organization and its journey toward fulfilling its insurance coverage needs with NIA.

Albertina Kerr’s Mission and Work

The work of Albertina Kerr is twofold: addressing the needs of those with intellectual development disabilities and combating childhood mental health struggles. By addressing both, the mission of Albertina Kerr not only centers the empowerment of people with IDDs and mental health disorders but also enables them to live life to the fullest life and reach their utmost potential.

With a mission as impactful as Albertina Kerr’s, the services it requires to fulfill its promises can be extensive.

These services include around-the-clock care; small community group homes that house adults, adolescents and children; and specialized programs for children with mental health problems. Additionally, Albertina Kerr has an established 24-bed psychiatric facility to provide services such as “clinical mental health treatments and other supports for those populations,” according to Warner.

For those it serves in the adult population, Albertina Kerr ensures that employment and support services are available, and also offers job skills, coaching, and development and placement services.

“Really, disability is a lifelong status, so that is the population we serve,” Warner said.

The risks and exposures associated with Albertina Kerr and its work centrally surround the safety of both its employees and its served population. This includes safety within its operating group homes and psychiatric facility, as well as managing the risks that come with administering health care services.

“[These risks] are all in addition to the normal commercial risks that you’d see,” Warner noted. “We have the everyday risks, but we also have those really specific, [niche] risks.”

The Organization and NIA

Though Albertina Kerr’s relationship with Nonprofits Insurance Alliance predates Warner’s tenure with the organization, the importance of NIA’s presence could not be understated. Warner discussed Albertina Kerr’s introduction to the Alliance, which initially came to fruition 20 years ago.

“My understanding is that, at the time, [Albertina Kerr] was [being insured] by a private insurer that worked extensively with nonprofits,” Warner said. “Our risks started to move outside of what they were comfortable insuring at that time.”

Warner noted that the addition of the organization’s early childhood and foster care services shifted its profile to land outside its previous insurer’s risk threshold.

At this time, NIA was shifting its capabilities into the Oregon market, and Albertina Kerr was able to begin discussions with the insurer.

“[The alliance] has been a good partner in terms of understanding our business, our risk and the fiscal environment in which we operate,” Warner said.

Additionally, the alliance has been integral in assisting Albertina Kerr, not just with insuring its risks but also with avoiding potential exposures.

“They’ve been able to partner with us in terms of risk avoidance,” he said. “The services they offer around consulting, connecting us with specialist consultants — it’s not something we would have had on our own.”

The consultants Warner mentioned were able to provide guidance on the avoidance of sexual abuse allegations, as well as on the navigation of claims born through litigation.

Looking Forward

As risk profiles evolve and new exposures come to the fore, Warner said, Albertina Kerr will continue to address the risks that meet them in the future.

However, Albertina Kerr recently began to expand its services outside of the state of Oregon, leading it to manage business risk on a larger landscape. Cyber exposure remains high on every business’s radar, and Albertina Kerr is no exception.

Ultimately, for Warner and the organization, it all comes back to safety.

“We’re extremely committed to helping people who are vulnerable and marginalized, but how can we maintain our risk focus as we approach change to make sure that we can lean in hard on our mission, and do it in a way that keeps ourselves and one another safe?” he said. &

Emma Brenner is a staff writer with Risk & Insurance. She can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

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.