Over the past several years, community-based nonprofits have found it harder and harder to find affordable property/casualty insurance, as many commercial and mutual insurers have made it no secret that the nonprofit sector is a market that they do not want to serve.
In response to this crisis, many nonprofits have turned to collective insurance providers called risk retention groups (RRGs). These have emerged as a thriving and much-needed alternative to commercial and mutual carriers — one that allows nonprofits to create their own solution to fit their insurance needs.
But, while insurance companies have shown time and again that they don’t want to insure nonprofits, it seems they also want to stop nonprofits from helping themselves as well.
Determined to maintain control over a market they don’t even want, an insurance trade association and insurance regulators are actively working to kneecap nonprofits’ RRGs, ensuring that they have no other options than the commercial and mutual carriers who don’t want to insure them anyway.
NAIC and NAMIC: The “Good Old Boys” of Insurance
It’s bad enough that these mutual insurance companies turn their backs on nonprofits, but they also collaborate with their regulator pals to use their considerable money and clout to stop every effort nonprofits make to help themselves through this crisis.
At a recent hearing in front of the C Committee of the National Association of Insurance Commissioners (NAIC) in Louisville, KY, representatives of the National Association of Mutual Insurance Companies (NAMIC) urged the insurance regulators to fight against efforts to pass a bill through Congress that will help nonprofits access the insurance they desperately need.
The Nonprofit Property Protection Act (NPPA) would expand the types of coverages RRGs could offer to nonprofits, allowing a market-based solution to solve the problem nonprofits face trying to access the monoline property insurance and monoline auto physical damage they need — coverage that commercial insurance companies, including mutual insurance companies, simply won’t provide.
Offering little supporting evidence, NAMIC representatives spouted the same tired party line that both they and the NAIC love to use against RRGs:
- Nonprofits don’t have any problem getting insurance — nothing to see here!
- Nonprofits can’t be trusted to manage their own insurance companies (despite decades of experience to the contrary writing the most difficult types of insurance that other companies won’t).
It was clear from the beginning, based on pre-meetings and questions during the C Committee’s hearing from some commissioners, that this was meant to be window dressing to make it appear that the NAIC actually gives a damn about nonprofits’ access to insurance.
This is shameful behavior by the good old boys’ network.
One Commissioner Spoke up for Nonprofits
The NAIC and NAMIC are both interested in protecting their own turf and the truth got way too close to coming out about the blatant self-interest of both organizations at the C Committee hearing.
However, Insurance Commissioner Michael Humphreys of Pennsylvania astutely asked a question that no one else on the C Committee had the insight or courage to ask.
He asked the NAMIC representative to name 10 insurance companies that provide the sort of insurance that nonprofits needed and were urging Congress to allow them to provide themselves.
When the NAMIC representative said he didn’t have the list with him, Commissioner Humphreys pressed him, asking if he could provide such a list in a week’s time.
Of course, the NAMIC representative said he couldn’t.
Why? Because he knew full well — as did everyone in that room — that the coverage nonprofits were asking for the authority to provide themselves is simply not available in the market.
Commissioner Humphreys pressed one more time, asking if NAMIC could ever provide a list of 10 companies providing the insurance nonprofits need.
That’s when the NAMIC representative showed how shamelessly they were willing to use their clout for their own self-interest — no matter how many nonprofits and their communities get hurt — by having the nerve to tell Commissioner Humphreys that he didn’t think that was an appropriate question.
Commissioner Humphreys pushed on in support of the nonprofits in Pennsylvania whose services to communities are being hampered by lack of access to insurance.
Commissioner Humphreys made it clear to the room that whether or not nonprofits could get the specialized monoline policies they need from commercial and mutual insurance companies was the very question they were addressing at the C Committee meeting that day.
He further urged the chair of the C Committee, Commissioner Alan McClain of Arkansas, and the NAIC generally to take this problem seriously.
Commissioner McClain could not adjourn that meeting fast enough.
This C Committee meeting was a showcase for the disdain that NAIC and NAMIC have for the nonprofit sector — they don’t seem to care how many nonprofits and community members get hurt as long as the NAIC protects their hegemony of state-based insurance regulation at all costs.
After that meeting, Deputy Commissioner D.J. Bettencourt (now Commissioner) published this letter describing the problem nonprofits were having finding insurance in New Hampshire.
Louisiana has recently passed a law to try to help ease the situation for nonprofits, but Commissioner Tim Temple has made it clear that a national or regional solution is what is required.
We are grateful to Commissioner Humphreys for his concern for the nonprofits in his state and for Commissioners Bettencourt and Temple for raising this issue — but mortified that the NAIC seems determined to bury this problem and let their henchmen at associations like NAMIC do their dirty work.
I have reached out to Neil Alldredge, the CEO of NAMIC, several times. He is too much of a coward to return my calls. He knows NAMIC is hurting charities by their actions, but they are determined to stay in lockstep with their buddies at the NAIC.
The state of regulation of insurance in this country is appalling because of associations like NAMIC cozying up with the regulators to protect the status quo.
They know their actions will hurt nonprofits and the people in their communities that rely on them every day. They just don’t care.
My ask of you
Do you have contacts with NAMIC, insurance commissioners, or members of Congress? Would you be willing to share these contacts to help nonprofits nationwide?
If so, I need to hear from you. I can be reached directly at (831) 621-6018 or firstname.lastname@example.org.
You can also help by getting the word out there. Please share this article with friends and colleagues via email or social media.
We need your help now. The property market is getting worse by the day.
A sequel: How the NAIC tried to convince NIA to use a scheme cooked up by the Arkansas Commissioner’s Office that would subject NIA to criminal and civil penalties.