news article
Conference property insurance update
November 29, 2023 / By Pastor Jack Keating, UNY Board of Trustees
As we prepare for the upcoming annual renewal of our Conference-wide insurance program with Brotherhood Mutual Insurance Company, we face an entirely different insurance climate than probably at any time in anyone’s memory.
“Unfortunately, most, if not all, Upper New York (UNY) churches have already received information from Brotherhood Mutual about significant deductible increases for the coming year without a proper explanation. As Chair of the Trustees, I truly regret the confusion this situation has caused. We are working with our insurance provider to ensure better communication with our churches in the future,” said the Rev. Pam Klotzbach, UNY Board of Trustees Chair.
There are many factors contributing to the increase in property deductibles.
The Insurance Market
Since 2021, the property insurance market has experienced the worst claims years at any time in more than 50 years. The combined commercial insurance industry paid out, in 2022 alone, $1.21 in property claims for every premium dollar they collected. This means the loss ratio for these property insurance companies was an average of 121.5%. Many carriers had higher losses, and a few had lower losses, but the effect of these losses on all insurance companies’ bottom line was catastrophic. These increased losses were due to many factors:
Increased storm losses (particularly in the Midwest and southern areas)
Fires, earthquakes, freezing, water damage, and more.
Our insurance carrier, Brotherhood Mutual, paid out over $1 million alone in United Methodist blizzard losses in Western New York because of the Christmas 2022 storm. Also having an impact is increased costs of both construction materials and availability of contractors due to the higher inflation rates.
At a recent meeting of Conference Treasurer’s across our United Methodist connection, many conferences shared that their churches are experiencing more than a 30% insurance premium increase with reduced coverages. In addition, many churches are being non-renewed due to their losses or the ministries they are providing.
One major insurance carrier writing church insurance is rumored to be renewing all their customers insurance policies with a mandatory $10,000 per occurrence deductible for all property losses in 2024.
A Different Approach
In an attempt to serve our churches, Brotherhood Mutual has designed a tiered deductible option, based on the total Insurance To Value (ITV) for each of our more than 600 churches. The 2024 deductible changes (for property losses ONLY) will be:
ITV New Deductible
0 - $3 million $ 2,500
$3 - $5 million $ 5,000
$5 - $ 10 million $ 7,500
More than $10 million $ 10,000
Even with these new levels of deductibles for property losses, we still expect to see a premium increase of approximately 5% (on average) across our Annual Conference. While no one likes to see premium cost increases, this 5% average is dramatically better than many other churches in our connection are experiencing.
What Can We Do?
The first, and best thing each church can do is to continue trying to reduce property insurance losses. While some property and weather-related losses are unavoidable, the vast majority of the losses we suffer could be prevented by increased awareness and risk management. Maintaining heat to prevent frozen pipes, organizing storage areas to prevent fire risk, and safeguarding property from vandalism and malicious mischief can reduce losses and protect premium levels. Click here to view valuable safety information provided by Brotherhood Mutual that can benefit your church during the winter months. Click here to view a safety and insurance self-inspection checklist that can be used year round.
In the next few days, your church will receive information about an opportunity to reduce your church’s new property deductible based on eliminating losses. Unfortunately, the New York State (NYS) Insurance Department has yet to approve Brotherhood Mutual’s first filing request of up to a $2,500 reduction so, at this time, the opportunities that are available to Upper New York churches work this way:
Churches with two years loss free= $100 deductible reduction
Churches with 4 years loss free= $250 deductible reduction
Churches with 6 years loss free= $500 deductible reduction
Brotherhood Mutual is also exploring other options for reducing our individual deductibles, which would need the approval of the NYS Insurance Department, and hopes to have more information during the 2024 policy year.
UNY Conference Treasurer Bob Flask says the Trustees will continue to look for ways UNY churches can save additional money.
“Although we are seeing increases to our local church’s deductible levels, our Conference is benefiting from a lower loss history than most Conferences across the country that resulted from major storms over the past few years. These lower loss ratios have allowed a much smaller increase in our renewal rates of around 4% compared to 15-30% in other Conferences. We will continue to work with our carrier to try and find additional savings for our churches including a possible deductible decrease (for no loss history) above what is currently being offered,” said Bob Flask.
Additionally, the UNY Board of Trustees recommends that prior to contacting Brotherhood Mutual’s Claims Department about a potential claim, all churches talk to American Church Group representatives James Nguyen or Brandon Bower first. In this new insurance environment, it may be that self-paying a small claim, in order to protect a deductible reduction, is the most cost-effective way to proceed. American Church Group representatives can guide you in the realities of placing a claim prior to reporting a potential claim. Call James at (315) 414-8631 or email him at JNguyen@AmericanChurchGroup.com or call Brandon Bower at (646) 565-0193 or email him at brandon@bowerins.com.
Final Thoughts
It appears that this current insurance market situation will, unfortunately, not be a short one. It often takes years for these types of loss situations to return to former levels. And when the situation turns, it is unlikely that we will see reductions in the standard insurance deductible levels.
Every church needs to take advantage of the loss prevention information and guidance of our insurance experts at American Church Group. As our partners in this Conference-wide insurance program, they too have a vested interest in helping us move through these difficult times. By working together and working smarter, we can work to minimize the negative effects of this situation to all our churches.