Underwriting trends for houses of worship in 2025
Weather-related disasters have resulted in more claims than predicted.
Insurance agents and brokers who work with houses of worship are inundated with questions from customers about why their premiums are increasing and capacity and limits are decreasing.
These actions are not isolated to one company, or even one niche within the insurance industry—underwriters across the United States are taking drastic actions to return to profitability.
As you look to 2025, here are a few trends you can expect:
Catastrophe losses are exceeding current expected probabilities for most models. Because an unusual number of weather-related disasters have resulted in more claims than predicted, insurance companies cannot simply rely on models to give acceptable returns. That means increased rates, which leads to unhappy customers.
Agents and brokers are the communication liaison between the insurance companies and the customers as they explain the sudden change. Underwriters are taking the “new normal” into consideration when determining premiums and deciding what and where they can afford to write business.
Customers will need to budget more for insurance premium costs. A multitude of factors are affecting premium costs, including the increased cost of building supplies and the higher price of vehicles. Because of inflation, it costs much more to replace a building than it did even 10 years ago. As a result, to be adequately covered, organizations need to increase their insurance limits—sometimes by a significant portion. That, of course, raises the premium.
As houses of worship prepare their budgets for 2025, they need to take these rising insurance costs into account. Rather than minimize the potential budget impacts, leaders should share those challenges with congregation members. Homeowners have noticed it costs them more to insure their homes and vehicles, too, and this understanding might help reduce the shortfall with additional donations.
Above all, agents and brokers should make sure their customers understand the significant consequences for under-insuring their building.
Aging infrastructure will affect insurability for many houses of worship. For many houses of worship buildings, their charm lies in their age and character. Unfortunately, that doesn’t extend to insurability—especially if a facility is in disrepair to the point that severe damage due to fire, high winds or other disasters could be catastrophic.
Houses of worship may need to upgrade certain vital aspects of their facility to keep their insurance policy. They should also prepare their building for severe weather, which could have a devastating effect on their bottom line if it causes major damage to their infrastructure.
One of the major responsibilities of insurance brokers and agents is to help customers weigh the cost of upgrades versus the additional cost of insurance because of a deficiency. In some cases, renovations are a good option as it may reduce premiums. In other cases, it may be better to relocate to a smaller and newer building.
Increased online presence may result in cybersecurity concerns. Many more houses of worship offer online worship, meetings, and other programming now than before the COVID-19 pandemic. While online offerings are an effective way to expand the organization’s ministry, they can also increase a facility’s risk for cybercrime, which can impact insurability and premiums.
Houses of worship have an obligation to protect their members from having their personal and financial information stolen.
- Bring a security vendor on board. There are many companies that offer data protection technologies, including McAfee and Forcepoint.
- Limit who can access confidential data. Even though a house of worship may have thoroughly vetted all staff members before hiring them, it’s still a good idea to restrict financial and personal information to a small number of people.
- Maintain network security. Houses of worship should not open their WiFi network to the public or broadcast their network name. They should set their network to lock out accounts after multiple unsuccessful login attempts and use firewalls and encryption to restrict access to data.
- Keep a clean machine. They should ensure all software on machines connected to the internet is fully updated. If they aren’t using a piece of software, they should delete it immediately.
The road continues to grow bumpier for agents and brokers, and the more you know about underwriting trends, the better you can serve your customers.
Peter Mahler first worked at Church Mutual from 1998 to 2004 as an underwriter and then an underwriting supervisor.
He rejoined the company in 2015 as a direct underwriting manager and was promoted to assistant vice president – direct underwriting in September 2017 and was promoted into his current position in February 2020.
See also: