Look to insurance carriers for help during pandemic, economic crunch

• Published date: 01 November 2020
• Date: 01 November 2020
• DOI: http://doi.org/10.1002/nba.30874

NOVEMBER 2020 NONPROFIT BUSINESS ADVISOR

5

© 2020 Wiley Periodicals LLC • All rights reserved

DOI: 10.1002/nba

Industry News

Look to insurance carriers for help during

pandemic, economic crunch

Nonprots are currently facing a slew of challenges

that show few signs of letting up. The COVID-19

pandemic and economic shutdown have caused

many to see revenues drop, volunteers disappear

and demand for services increase dramatically. While

many are looking at new ways to raise funds and/or

trim expenses, one source of relief they may not have

explored is their insurance.

According to Patrick Baker, nonprot D&O Prod-

uct Manager at Travelers Insurance, a nonprot’s

insurance carrier can do a number of things to help

them weather the current challenging climate.

“There’s a number of different ways to structure

policies to help meet their needs right now,” Baker

told Nonprot Business Advisor.

Although he specializes specically in directors and

ofcers liability policies, Baker said that many of the

tips he offers can apply to the full range of policies

that charities might have, including management li-

ability, employment practices, duciary liability and

criminal and cybersecurity coverage.

Baker shared the following examples:

• They can explore the advantages of different

coverage limit options, with lower limits leading to

lower premiums.

• They can ask for different deductibles—gener-

ally, the higher deductible, the lower the premium.

• They can sign-up for multiyear policies that al-

low them to lock in their premiums for an extended

period instead of having to go through the lock-in

process all over again in a year.

• If they are ush at the moment, they can prepay

their policies in advance, which will yield additional

discounts.

• If they are short on cash right now, they can

explore payment options that offer greater exibility

as to when they must pay their premiums.

These options will make sense for some organiza-

tions, and less for others, depending on their services

and operations, as well as current nancial circum-

stances, Baker said. But they are worth exploring as

nonprots look for ways to keep functioning under

the operational and nancial constraints that many

nd themselves in.

Another way that their insurers might be able to

help is with education and training resources, Baker

said. Travelers, for example, offers its policyholders

free online access to a range of online materials

that highlight the various ways in which COVID-19

increases risk for underwriters. For example, as non-

prot employees transition to home ofces and their

organizations focus on virtual fundraising events,

their cybersecurity risks increase substantially. Insur-

ers— Travelers included—have put together primers

for nonprots that explain these risks and what or-

ganizations and their employees can do to mitigate

them. Travelers even has a free hotline staffed by an

employment attorney for its policyholders seeking le-

gal advice about human resources issues, which could

come up because of the new working arrangements

that many employees of nonprots are dealing with.

According to Baker, nonprots can do several

things that would help keep their premiums lower to

begin with, including:

• Taking a hard look at their budgets and identi-

fying where their funding will be coming from in the

short and medium term. Are they reliant on federal

grant programs that might be sidelined to free up re-

sources for the pandemic response? Have they gured

out how to supplant virtual fundraisers for in-person

events, or otherwise replace the funding such events

typically yielded their organizations? The more they

can demonstrate their nancial sustainability, Baker

said, the better when it comes to underwriting.

• Have an engaged board of directors. According

to Baker, charities with informed and engaged boards

look better to insurers because it signals better over-

sight—and more efcient and compliant operations.

• Be good communicators. Finally, Baker said,

nonprofits need to keep their insurance carriers

informed about what they are doing to adapt to

changing conditions, so their insurers can help them

do so successfully.

Nonprots should remember: Their insurance

carriers want them to succeed in their missions and

remain on solid nancial ground. That’s good for

them and for the insurers themselves, and companies

(See INSURANCE on page 8)