An ongoing wave of disasters – Gulf Coast hurricanes, wildfires in California, severe thunderstorms and flooding in the Midwest – along with skyrocketing construction costs post-COVID have left the insurance industry reeling.
As a result, companies such as Church Mutual, GuideOne and Brotherhood Mutual, which specialize in insuring churches, have seen their reserves shrink. That’s led them to drop churches they consider high risk to cut their losses.
Finding replacement coverage is difficult for churches that lose coverage – in part because churches are a niche market that’s difficult to insure and full of risk.
They are open to the public, work with everyone from infants to senior citizens, sometimes house social service programs, are run by volunteers and often have large and expensive buildings.
Because of the First Amendment and the separation of church and state, ministries are largely unregulated, and insurance companies say unregulated businesses are difficult to underwrite.
Churches in Texas have been hit particularly hard by these strains on the insurance industry.
Trinity Baptist Church in Mount Pleasant is a good example. When the “snowmageddon” freeze hit in 2021, a frozen pipe burst in one of their offices, resulting in significant flood damage and a large insurance claim.
The result – an 85 percent increase in their insurance rates is coming next year.