Why Nonprofit Insurance Premiums Are Rising - And How to Respond Strategically
Insurance costs are on the rise — and not by small margins. Nonprofits of every shape and size, from charter schools to religious institutions, are experiencing notable spikes in their insurance premiums. Increases of 15% to 30% annually are becoming more common, and many organizations are seeing these jumps despite having no changes to their claims history, asset valuations, or operational risk.
Over the last 3 years, the Community Purchasing Alliance (CPA) has been working with nonprofit executives, operations directors, and finance committee members who are tasked with managing risk and budgeting for insurance costs. Many have come to us after they have been abruptly dropped by their current carrier, or have seen such significant premium increases that their organizations’ bottom-lines are in jeopardy. Our group insurance program has yielded some impactful results for our organizations — with many of our participants typically saving 15-20% on their annual premiums. As a result, our staff have been working to educate nonprofit leaders and connect them with insurance brokers that can meet their needs without breaking the bank.
Understanding the Market: Why Premiums Are Increasing
Broadly speaking, cost increases are rarely tied solely to an organization’s behavior or profile. Instead, they stem from larger systemic forces affecting the entire insurance marketplace, including: climate volatility, evolving legal standards, and financial pressure on insurance carriers.
1. Climate Volatility: The Financial Impact of Natural Disasters and the Rising Cost of Reinsurance
The U.S. insurance industry has been exposed to over $100 billion per year in insured losses from natural disasters for each of the past 7 years. These losses include fires in California, hurricanes in the Gulf Coast, ice storms in Texas, and floods throughout the Midwest.
Even if an organization is far from any known risk zone, it is still impacted. That’s because primary insurance carriers rely on reinsurance to manage their own risk. Commonly referred to as “insurance for insurance companies,” reinsurance is a method used when multiple insurance companies share risk by purchasing insurance policies from other insurers to limit their own total loss in case of disaster. When insurance companies join together in this way, they link their costs to events that may only affect a certain sector or geographic area but impact the entire pool because the cost of claims are borne by the group of insurers. When reinsurance costs rise — as they have dramatically in recent years — those expenses get passed down to policyholders. The result is across-the-board premium increases, regardless of claims or geography.
2. Evolving Legal Standards: Social Inflation and Rising Liability Exposure
"Social inflation" is a term used to describe the rising cost of liability claims due to shifting legal and societal dynamics. Several factors contribute:
Larger jury verdicts, including punitive damages
Increased litigation around abuse, discrimination, and negligence
Expanded liability laws that hold organizations accountable in new ways
Nonprofits that serve vulnerable populations — such as children, seniors, or individuals with disabilities — are especially at risk. Unfortunately, even unsubstantiated claims can require costly legal defense and lead to higher future premiums.
Insurers are responding by revising liability coverage pricing models and making these policy types more expensive across the board. Increasingly, insurance companies are dropping clients they perceive as a higher risk profile due to the populations they serve. This often forces nonprofits to seek coverage elsewhere, many times resulting in costlier premiums.
3. Financial Pressure on Insurance Carriers
Along with higher underwriting costs, increasing premiums are a result of insurance carriers’ financial considerations as well. Faced with costly claim events such as destructive natural disasters combined with rising social inflation, many insurers seek to recover lost profits from large payouts on insurance claims by increasing rates in order to maintain corporate profitability.
To stem losses, carriers are making strategic adjustments that affect nonprofit clients directly, such as:
Withdrawing entirely from certain geographic markets
Declining to renew older buildings or certain nonprofit segments
Increasing deductibles and reducing optional coverage extensions
This contraction in the market makes it harder for nonprofits to secure stable affordable policies. In a recent conversation we had with one church administrator in Ohio, she shared that her previous insurance company dropped her due to what the insurer claimed to be a “too highly variable” client segment — which included a daycare, senior groups, and renting the facility to smaller nonprofits. She went from a $17,000 annual premium to over $60,000 per year in premiums with a new insurer before coming to the co-op.
PC: Business Insurance
Securing the Right Coverage: Proactive Steps Nonprofits Can Take
While we can’t control the global insurance market, we have learned of a handful of powerful strategies that give organizations more leverage and stability. Here are four proven tactics CPA has discovered to be effective methods to help keep premiums under control:
1. Begin the Renewal Process Early
Fewer carriers, longer underwriting cycles, and tighter guidelines mean early action is essential. Starting the renewal process 60 to 120 days in advance allows time to:
Conduct policy reviews
Solicit competitive quotes
Coordinate with leadership or board members for approval
Waiting until the last month before renewal drastically limits options.
2. Request a Strategic Policy Audit
A policy audit conducted by a broker who understands the nonprofit sector can uncover both over- and under-insurance. A good broker will not only flag concerns but also confirm when you're already in a strong coverage position. Key areas to assess:
Valuation accuracy: Is your organization paying premiums on inflated asset values?
Coverage gaps: Are risks like cyber liability or sexual misconduct properly addressed?
Organizational changes: Has your organization’s mission or program mix evolved?
3. Explore Group Purchasing Options
Group insurance purchasing — through co-ops like CPA — can give nonprofits access to better rates and more flexible underwriting. CPA members, for example, often see:
15% to 20% savings on policy premiums (while maintaining coverage levels)
Access to carriers that specialize in nonprofits, congregations, and schools
Increased bargaining power during policy negotiations
Reduced costs for carriers (because they are sharing underwriting costs)
Group leverage can flatten rate increases, maintain better coverage levels, and increase transparency.
4. Choose a Broker Who Prioritizes Fit, Not Just Price
Not all brokers operate the same way. Beware of those who:
Omit or gloss over exclusions and sub-limits
Push the cheapest policy without explaining trade-offs
Avoid disclosing why a carrier or policy was selected
A strong broker acts as your advisor, not just a salesperson. They should be willing to say: "Your current policy is still your best option."
How the Co-op Can Help
Our growing commercial insurance group contains dozens of institutions that are leveraging their collective buying power to save money and secure better coverage. CPA works with a group-appointed broker that has years of experience serving co-ops and nonprofits (including schools, houses of worship, and other community institutions). Together, we can:
Review your current policy to see how it lines up with other similarly-situated institutions
Help you find new coverage
Connect you with others in the purchasing group to ask questions, share insight, and troubleshoot problems
There is no fee or obligation to purchase when engaging with CPA’s insurance program. The co-op is here to help you save money on your building, so that you can spend more on your mission and people.
Upload a copy of your policy here to get started. Still have questions? Email insurance@cpa.coop