As Religious Institutions Face New Risks, Insurers Respond With New Products

As churches and synagogues become more involved in the communities they serve, they are being exposed to risks they never had to consider before, according to an article in the March property/casualty edition of Best's Review.

"Churches used to be used for Sunday services," says Patrick Moreland, vice president of corporate communications for Church Mutual Insurance Co. "Now they're used all week long for social outreach, education, and recreation." Religious institutions-responding to societal changes, including shrinking government programs-sponsor many activities that subject them to increased risk. Hosting soup kitchens, centers for homeless people, and work-experience programs for the unemployed exposes churches to potential liabilities.

"Twenty years ago, no one sued a church," says Hugh White, vice president of marketing at Brotherhood Mutual Insurance Co. "But over the past 10 to 20 years, there has been a diminishing respect for America's churches. There is no sense of loyalty. If someone is injured on church property, they will sue."

In response to this litigiousness, Brotherhood has developed "religious communication" liability insurance. Congregations purchase such coverage to protect them if someone claims emotional injury caused by receiving religious communication. Other concerns are alleged sexual misconduct, auto coverage, and employment practices. To address these issues, insurers are lowering limits and promoting educational programs.

"We have to keep one step ahead of the culture to protect America's churches," Mr. White says.

Religious institutions account for $750 million to $1.25 billion of the commercial lines industry's $135.42 billion of premiums. While only a small part of the industry, the top church insurers sport healthy returns.

Church Mutual and Brotherhood are two of the three insurers that write coverage for about half of the religious institution market. Church Mutual reported $231 million annual premium volume for 1997-up about 8% from 1996. Brotherhood's 1997 premiums totaled $83 million, up from $75 million in 1996.

The third major player is the Guidant Insurance Group. Guidant reported $250 million of premiums in 1997, up from $240 million in 1996.