A Hardening Insurance Market for Non-Profits-Steps to Prepare for the 2025 Renewal Process

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Non-profit and human services leaders started experiencing a hardening property and casualty insurance market in 2024 illustrated by reduced limits of liability, higher deductibles, and increased premiums. And, the market shift still may not have been enough to right the ship.

According to Insurancebusinessmag.com, reinsurers are seeking double digit increases in 2025 due to rising claim costs. Behind these rising claims costs are social inflation, emerging risks (i.e., opioid and synthetic chemicals), reserve increases, litigation funding and no promising tort reform. Reinsurers also argue that 2024 rate hikes were insufficient. As a result, these companies are reducing exposure to the US casualty market.

When reinsurers sneeze, the insurance market and its insurers catch a cold. In 2025, expect more signs of the hardening market. However, there are steps non-profit leaders can do to prepare for the renewal process in 2025.

Anticipate Premium Increases

Consider the organization’s growth in all rating factors, whether it be revenue, employee count, vehicles, or beds. Premium will increase accordingly before rate increases.

Complete Full Insurance Applications

An experienced insurance agent will ask clients to update applications in hard copy, using electronic documents, or via an online portal. If this is not happening, ask why. If it is happening, then complete the full version rather than truncated renewal applications. Creating competition in the marketplace means providing underwriters a full scope and understanding of operations. Very few underwriters will quote using another carrier’s renewal updates.

Review Contract Insurance Requirements

Many carriers are reducing limits of liability for abuse/molestation and professional liability. Others will no longer quote umbrella or excess liability. Stacking quotes from various carriers to achieve once readily attainable limits is possible, but this strategy comes with a significant premium cost. So, before stacking policies, review contracts with counties, regional centers, and funders to understand the required insurance coverage.

Engage with Partners Now

Communicate to organization partners the cost to maintain required insurance limits. Take a hard look at current programs to determine if outcomes (i.e., revenue and impact) warrant the increased insurance costs. Some programs may need to sunset.

A continuing hardening insurance market in 2025 will force non-profit and human services leaders to approach the renewal process with care and new focus. The recommended steps listed above will help organization leaders develop a renewal strategy while helping underwriters’ analysis prior to releasing quotes.

For more information about the hardening market, contact me at sbrown@ranchomesa.com or (619) 937-0175.

Excess/Umbrella Rates Experiencing Alarming Price Jump

Author, Sam Clayton, Vice President of the Construction Group, Rancho Mesa Insurance Services, Inc.

As if the 2020 business landscape has not already been challenging enough, a hard market for excess/umbrella is occurring at a concerning rate, resulting in rising premiums, limited capacity and a restriction in terms and conditions.

A hard market can be defined by a decrease in limit and underwriting capacity, and an increase in rate and premium. While other lines of liability are seeing single-digit increases, excess/umbrella pricing is experiencing 20-30% jumps, depending on the risk. This significant increase is the result of several factors including:

• Social inflation

• Nuclear judgements

• Third-party litigation financing

• Natural and man-made catastrophes

• Increase in severe distracted driving incidents

In addition to these premium increases, insurance carriers are reducing their capacity. Previously a carrier might have been comfortable in offering higher limits such as $25 million on a risk and now they are limiting their lead limits to $5 or $10 million dollars, which then require a business, in need of higher limits, to seek additional participation from other carriers to meet their needs. This creates both the need to “stack” limits and at the same time make sure policy terms stay consistent.

The area most often overlooked are new restrictions in the terms and conditions. Some to be mindful of include:

• Communicable Disease Exclusions

• Wildfire Exclusions

• Higher Retention Limits

Now more than ever is the time for contractors to be meeting with their broker to put proactive steps in place to minimize the impacts of this hardening market. As the construction group leader here at Rancho Mesa, if you have questions or need help in navigating these turbulent times, please reach out to me at (619) 937-0167 or email at sclayton@ranchomesa.com.