History of the Nonprofits Insurance Alliance Group

The Nonprofits' Insurance Alliance of California (NIAC) was incorporated in September 1988, and began operations on November 1, 1989. The idea for NIAC was proposed by Pamela Davis in her master's thesis for UC Berkeley. That thesis was funded by the Conrad Hilton Foundation and published by the California Community Foundation and the Conrad Hilton Foundation. NIAC was founded by Ms. Davis while she was working under the fiscal sponsorship of the California Association of Nonprofits. NIAC is organized under Chapter 5005.1 of the California Corporations Code. NIAC was granted tax-exempt status by the state of California in 1991. In 1993 the state of California challenged that tax exemption because of an opinion filed in federal Claims Court during NIAC's attempt to clarify its federal tax position. In 1996, after a six-year struggle, NIAC was successful in having federal tax law changed. NIAC became federally tax-exempt under section 501(c)(3) in January of 1997. Also in 1996, NIAC was successful in getting legislation passed in California, which grants NIAC state tax-exemption.

NIAC was created as a result of the liability insurance crisis in the mid-1980s when many nonprofits in California could not obtain insurance at any price. The following is an excerpt from testimony by Pamela Davis before the California Assembly in 1987.

"Between 1984 and 1986, general liability insurance premiums increased 200 percent or more for one out of four charitable nonprofit organizations in California. During that same period, insurance companies canceled or refused to renew the general liability policies of one out of five California charitable nonprofits. Some important human service programs, such as childcare, foster care, group homes and health service were forced to dramatically cut services or close because they couldn't find affordable insurance."

NIAC's mission is to serve 501(c)(3) tax-exempt nonprofit organizations in California by providing a stable source of reasonably priced liability insurance coverages tailored to the specialized needs of the nonprofit sector, and to assist these organizations to develop and implement successful loss control and risk management programs. NIAC now has more than 7,500 members and $216.3 million in assets, and is Rated A VIII (Excellent) by A.M. Best Company.

In 1999 a feasibility study, underwritten by the David & Lucile Packard Foundation, was conducted to determine what it would take to expand NIAC's concept nationwide.

The results of that study yielded the Alliance of Nonprofits for Insurance, Risk Retention Group (ANI). ANI was incorporated in 1999 and began operations in September 2001. ANI is an insurance company domiciled in Vermont. ANI is currently writing coverage for 501(c)(3) nonprofits in Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Utah, Vermont, Virginia, Washington and Wisconsin. ANI is Rated A VIII (Excellent) by A.M. Best Company.

Initial capital for ANI was provided by generous grants from the David & Lucile Packard Foundation and the Bill & Melinda Gates Foundation. Each foundation contributed $5 million in grants for a total of $10 million in capital for ANI and its affiliated company, the National Alliance of Nonprofits for Insurance (NANI), a captive reinsurer. NANI provides reinsurance to ANI and also to the Nonprofits' Insurance Alliance of California (NIAC). All of these companies comprise the Nonprofits Insurance Alliance Group, which has four independent, but related boards of directors. All organizations in this group exist only to serve 501(c)(3) tax-exempt nonprofits. All of these affiliated companies are also 501(c)(3) tax-exempt organizations governed by their nonprofit member-insureds. At year-end 2012, the Nonprofits Insurance Alliance Group had total equity of $163.1 million and total assets of $331.3 million. Together, the organizations in the Nonprofits Insurance Alliance Group insure more than 12,000 nonprofits in 31 states and DC.

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