By Will Hall, Baptist Message executive editor
ALEXANDRIA, La. (LBM) – In response to the church insurance crisis plaguing congregations across the state, Louisiana lawmakers passed legislation in June, now signed into law by the governor, that established a church self-insurance trust.
However, a separate funding line item for the trust was deleted during negotiations between the Senate and House. Consequently, multiple approaches are underway to secure one-time funding from the state and federal governments and possibly other sources to assist with setup costs. In the meantime, efforts are beginning to complete “no cost” steps while the funding appeals proceed.
LBC RESPONDS
The push to help churches began in March when Steve Horn, executive director of the Louisiana Baptist Convention, reached out to the Louisiana Baptist Office of Public Policy to share that churches were contacting his office about insurance nonrenewal notices and soaring premiums due to the four hurricanes of 2021-22.
Sen. Katrina Jackson responded to contact from the Louisiana Baptist Office of Public Policy by arranging a Zoom call with the state insurance commissioner. Likewise, Sen. Robert Mills, a member of First Baptist Church, Bossier City, with Jackson as cosponsor, pushed through S.B. 147, which established the church self-insurance program.
NEXT STEPS
Terry Duke, North Louisiana manager with Arthur J. Gallagher & Co. who assisted with the development of the legislation, told the Baptist Message that with the state’s permission to set up what is effectively a “cooperative” for churches and religious nonprofits, it is essential to collect data that will help move the process toward the actual launch of insurance coverage for participating churches.
Duke emphasized that participation in the program is voluntary, and that the data will be kept confidential, but asked that congregations submit information even if they are happy with their current coverage.
“Giving us data is not a commitment to the program,” Duke said. “However, it will help us develop a statewide profile of property values and risks that are essential to know when talking with lawmakers and reinsurance brokers such as Lloyd’s of London.”
Duke explained that the self-insurance program will mean that churches can avoid costs like agent fees and national marketing campaigns and such, thus lowering premium costs. However, like public insurance companies, the church self-insurance trust will need to buy a catastrophic reinsurance policy from one of 20 firms globally, like Lloyd’s of London, that offer such coverage.
“We will need to determine the C.O.P.E. of a diverse pool of properties,” he said.
— “Construction” (what type of structure, age of roof, type of wiring, condition of HVAC, etc.);
— “Occupancy” (worship center, family life center, college residential hall, etc.)
— “Protection” (sprinklers installed, fire department in the local community, etc.)
— “Exposure” (kinds and numbers of claims that have been made in the past five years)
“Once we compile this information, we will complete catastrophic modeling that will tell us what our working layer of insurance would be and our maximum probable loss,” Duke continued. “That will help us make decisions about what level of catastrophic reinsurance is needed, provide a framework for setting premiums for participants and determine other elements of the program design.”
Duke offered that the program could eventually also offer coverage of general liability needs and church owned automobiles, thus further lowering overall rates from broadening services and risk pools.
But, he said, for now, it is important to get the property casualty program up and running.
“Again, participation in the program is voluntary,” Duke re-emphasized. “But we are looking to recruit large numbers of churches. The more participants, the broader the risk and the lower the costs for everyone.”
A website is being developed to allow congregations to “drop in” copies of their current policies as well as to give permissions to organizers to request five-year profiles of premiums, property values and claims from their current insurers. The link for this website will be published on BaptistMessage.com as soon as the online page goes live.
