John Parks was taking his first sabbatical in 40 years of ministry when he got a call from his church’s accountant with some bad news.
Church Mutual, the church’s insurance company, had dropped them.
“This doesn’t make sense,” Parks, the pastor of Ashford Community Church in Houston, recalls pondering on the time. “We’ve never filed a claim.”
Five months and 13 insurance firms later, the church finally found substitute coverage for $80,000 per 12 months, up from the $23,000 that they had been paying.
“It’s been an adventure,” said the 69-year-old Parks from his home in Houston, where the facility was out after Hurricane Beryl. “That’s putting it politely.”
Parks and his congregation aren’t alone. An ongoing wave of disasters—Gulf Coast hurricanes, wildfires in California, severe thunderstorms and flooding within the Midwest—together with skyrocketing construction costs post-COVID have left the insurance industry reeling.
As a result, corporations reminiscent of Church Mutual, GuideOne and Brotherhood Mutual, which specialise in insuring churches, have seen their reserves shrink. That’s led them to drop churches they consider high risk as a way to cut their losses.
Hundreds of United Methodist churches within the Rio Texas Annual Conference learned they’d lost property insurance in November last 12 months, leaving church officials scrambling. More than six months later, some churches have found recent insurance, often at a steep increase. Others still have none, said Kevin Reed, president of the conference board of trustees.
Reed said the conference had a couple of month’s notice that its property insurance policy, which local congregations could buy into, was being canceled. That wasn’t enough time to seek out recent coverage before the policy expired. It also left local churches on their very own.
We haven’t found a very good solution,” said Reed. “It continues to be a big problem for our churches.”
United Methodist churches in Iowa have also lost insurance, in line with the Iowa Annual Conference, within the aftermath of severe weather in the realm. The Rev. Ron Carlson, treasurer of the Iowa conference, said that each small rural churches and bigger churches have been affected. Carlson said the conference reminded churches earlier this 12 months to be proactive in checking on their insurance and never waiting for a renewal offer.
The UMC’s Book of Discipline requires churches to hold insurance for the total substitute cost of their buildings in addition to liability insurance. For some churches, said Carlson, that’s just impossible. He said the conference is attempting to sort out what happens to those churches.
For struggling churches coping with declining membership and giving, he said, rising insurance could be the last straw.
“There have been some which have said we are able to’t do that anymore,” he said.
For churches that lost their insurance, finding substitute coverage is difficult. That’s partly because churches are a distinct segment market that’s difficult to insure and filled with risk, say experts. They are open to the general public, work with everyone from infants to senior residents, sometimes house social service programs, are run by volunteers and sometimes have large and expensive buildings.
Churches also operate with little oversight, said Charles Cutler, president of ChurchWest Insurance Services, which works with about 4,000 churches and other Christian ministries.
“Because of the First Amendment and the separation of church and state, ministries are largely unregulated,” said Cutler. “And unregulated businesses are difficult to underwrite.”
The church insurance market, just like the insurance industry overall, has been hit with an ideal storm in recent times. Supply chain shortages for construction materials that began through the pandemic have driven up the associated fee of rebuilding after a disaster. When the associated fee of rebuilding goes up, so does the scale of claims, said Cutler. That led insurance firms to boost their rates as a way to cover those claims.
Then a series of natural disasters hit the industry hard—including hurricanes, wildfires and what are referred to as “severe convective storms”—thunderstorms with extreme rain and wind that caused billions in damage last 12 months, in line with the Insurance Journal. Claims from those disasters have stressed the reserves that insurance firms use to pay claims.
The church insurance market, just like the insurance industry overall, has been hit with an ideal storm in recent times. Supply chain shortages for construction materials that began through the pandemic have driven up the associated fee of rebuilding after a disaster. When the associated fee of rebuilding goes up, so does the scale of claims, said Cutler. That led insurance firms to boost their rates as a way to cover those claims.
Then a series of natural disasters hit the industry hard—including hurricanes, wildfires and what are referred to as “severe convective storms”—thunderstorms with extreme rain and wind that caused billions in damage last 12 months, in line with the Insurance Journal. Claims from those disasters have stressed the reserves that insurance firms use to pay claims.
Pam Rushing, the chief underwriting officer for Church Mutual, said that the corporate remains to be renewing policies and accepting recent business in every state. However, the corporate not offers property coverage in Louisiana. Church Mutual didn’t give details of what number of policies have been canceled.
“We don’t take nonrenewal decisions evenly and it represents a small percentage of our overall portfolio,” Rushing said in an email. “For us to stay financially strong, viable and best capable of serve our mission, we’d like to mitigate the severe impact catastrophic weather has had—and can proceed to have—on our bottom line and our ability to serve customers nationwide.”
Brad Hedberg, executive vp of The Rockwood Co., a Chicago-based agency, said church insurers are facing pressure from the reinsurers—large corporations reminiscent of Lloyd’s of London that provide insurance to insurance firms so catastrophic claims don’t overwhelm them. Those corporations want to reduce their exposure to certain varieties of claims—meaning church insurers can’t offer as much coverage as they did prior to now.
Hedberg, who works with churches and other ministries, said he spends numerous time helping clients keep the insurance they have already got and reduce their risk of filing claims. That means ensuring churches have policies in place for all the things from abuse prevention to who gets to drive the church van, in addition to being proactive with constructing maintenance and safety projects. It also means being strategic in when to file a claim—and when to pay for a loss out of pocket. Churches should only tap their insurance for giant losses—not small claims, he added.
“If small claims get filed, your coverage could possibly be nonrenewed or your premium could undergo the roof,” he said. “The market is just that bad.”
Once a church loses coverage, it might face higher prices for years. That’s likely the case for Bethany Covenant Church in Berlin, Connecticut, said Greg Pihl, who chairs the church’s finance committee.
The church had been paying $12,500 for insurance and had made a claim for flooding damage as a consequence of a faulty sprinkler. Pihl said the church learned this past spring that its insurance had been canceled. Now Bethany can pay about $73,000 for less coverage, said Pihl.
That made for a difficult conversation at a church business meeting and midyear changes to the church’s budget. The church was capable of tap some reserves to cover the increased premium this 12 months. But it’ll likely be paying higher rates for the subsequent three to 5 years, said Pihl. And those reserves, meant to pay for things like a recent roof, still should be built back up.
Pihl said that before the church’s policy was canceled, he expected rates to go up, perhaps by 10 percent or 20 percent. But that proved overly optimistic.
“It’s only a terrible market,” he said.
Nathan Creitz, pastor of Calvary Baptist Church in Bay Shore, New York, a congregation of about 100 people on Long Island, said that prior to now, getting insurance hadn’t been a worry. The total annual cost for all of the church’s insurance—the church constructing, a parsonage, liability—was lower than $4,000.
“We got lucky,” he said. “We were grandfathered into some really low rates.”
Things modified last summer after Calvary’s insurance carrier dropped the church, deciding to not renew the policy. With the assistance of a broker, the church found recent insurance for about $14,000. Since a lot of the costs of running a church, reminiscent of paying staff and keeping the lights on, are already fixed, that meant cutting programs. The church also needed to delay capital improvements to the constructing, which mockingly are the sorts of things that might make them easier to insure.
“It’s not ideal but that’s what happened,” Creitz said.
For Ashford Community Church in Houston, finding the funds to cover the increased insurance has also been a challenge, especially post-COVID, when church attendance and giving are down.
Higher insurance costs also mean less money for ministry on the church, which Parks described as a mission-focused congregation.
The church’s 40,000-square-foot facility is currently home to a couple of dozen congregations, through a partnership called Kingdom City Houston. Parks said he got here to the church a couple of decade ago after hopes of beginning a church overseas fell apart. At the time, the church was struggling and was using only 1 / 4 of the space in its constructing.
Today about 1,200 people worship every weekend within the constructing—which holds multiple services in its three sanctuaries. Parks said worshippers come from greater than 60 countries. The churches each have their pastors but share some back-office staff.
The idea is to point out that Christians from different backgrounds can still be united. “We can walk side by side, even when we don’t at all times see eye to eye,” he said.
Parks said Ashford’s constructing has been largely untouched by recent storms. After Hurricane Harvey caused massive flooding in 2017, the church hosted volunteers from across the country who helped residents get well.
“It was a very good time of serving the community,” he said.
