After more than 35 years, I continue to be amazed (but never surprised) by the strength, adaptability, and resilience of nonprofits in the face of obstacles, setbacks, and heartbreak. 2024 has seen more than its fair share of these challenges.
It’s been a tougher year than most. When it comes to liability and property coverage, the world is rapidly changing. These changes affect everything, including the coverages we can provide, the risks we’re able to accept, and which nonprofits we can provide them to.
NIA’s purpose is to protect nonprofits, to act as a shock absorber when major changes happen. But we can’t always absorb all of it.
During the past five years, NIA has doubled in size. This is extremely unusual for an insurer with more than three decades of experience. That significant growth, as well as financial and social inflation, has put pressure on our leverage ratios.
Here’s how it happened: We chose to be the safety net for thousands of nonprofits that commercial insurers dropped as a result of COVID and high-profile sexual abuse cases. With the exception of the decision we made to nonrenew some coverages for California foster family agencies (the most difficult decision NIAC has ever had to face), we were able to be that safe haven for most types of nonprofits when others turned them away.
As with other nonprofits, when the community needs their services, we determined that the right thing to do was to allow some movement in our ratios to provide the support our sector needed during this difficult period.
As a result of that slightly higher leverage, AM Best recently indicated a negative outlook for our Long-Term Issuer Credit Rating (ICR). Nevertheless, our Long-Term ICR remains in the “Excellent” category. AM Best also affirmed our Financial Strength Rating of A (Excellent).
We are driven by our mission to provide insurance for 501(c)(3) nonprofits whenever possible, and stretch, like we have for these past few years, to make that happen. We already are seeing positive movement from the recent steps we have taken to address the leverage issue, and expect to continue to see additional desired effects in the coming years.
While more challenges are likely ahead of us in 2025, NIA is as committed as ever to the nonprofits we serve. We are resilient. We’re self-correcting. And we have the data that allows us to be nimble.
Even when times are tough, we are committed to the nonprofits that count on us — success is measured in our ability to get back up, dust ourselves off, and move ahead together.
