Christian Brothers Risk Pooling Trust for Nonprofit Organizations

The Christian Brothers Risk Pooling Trust is a unique resource for nonprofit organizations. It's a risk management solution that can help reduce financial burdens.

This trust was established to provide a financial safety net for nonprofit organizations facing unexpected risks. By pooling resources, nonprofits can share the costs of unexpected events.

The trust has a long history of supporting nonprofits, dating back to the 1980s. It's a testament to the Christian Brothers' commitment to helping organizations in need.

The trust's mission is to provide financial assistance to nonprofits during times of crisis. This can include unexpected lawsuits, property damage, or other unforeseen events.

Additional reading: Duffer Brothers Christian

Nonprofit organizations have been drastically affected by the liability insurance crisis, with many facing huge increases in liability insurance premiums in 1985 and 1986.

In 1985 and 1986, nonprofit organizations saw huge increases in liability insurance premiums, leading to drastic cuts in services and staffs, use of scarce reserves, fee increases, reduced insurance coverage, and even closures in some cases.

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A study by United Way of Los Angeles found that a loan program to help nonprofits absorb the annual increase in insurance costs would require funds in excess of $2 million for the Los Angeles agencies alone.

The crisis has been especially hard on nonprofit organizations due to their relatively inflexible funding mechanisms, which make it difficult to pay for dramatic and unanticipated increases in the cost of doing business.

Some programs, such as child care, foster care, group homes, and health services, frequently require liability insurance as a condition of licensure, making it even more challenging for nonprofits to operate.

Here are some examples of the dramatic premium increases faced by nonprofits:

• A small-town development achievement center saw its premium go from $891 to $22,000.

• A program aiding the elderly with a community center and jobs program had its rate increased from $4,300 to $16,000.

• A small theatre group had its rates increased from $750 to $12,000 for a policy that offered less coverage.

• A women’s clinic had its liability and medical malpractice insurance coverage not renewed until it agreed to curtail all abortion services.

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In California's nonprofit sector, there are three alternatives to expand the commercial insurance market, making insurance more accessible and affordable. These alternatives involve risk sharing among nonprofit organizations.

A captive insurance company is one option, which allows nonprofits to join their resources and own their own insurance company, spreading the risk of liability losses across a large number of organizations.

Nonprofits can also form a risk retention group, another mechanism for sharing risk and spreading liability losses among member organizations.

A risk pool is a third option, where nonprofits can pool their resources to own their own insurance company and share the risk of liability losses.

Here are the three alternatives listed out for easy reference:

Each of these alternatives has its own legal and organizational differences, but they all achieve the same goal of making insurance more available and affordable for nonprofit organizations.

The Christian Brothers Risk Pooling Trust offers several benefits to the nonprofit sector. Lower prices are possible because better information about the nonprofit sector allows the pools to charge a price that reflects the calculated risk cost.

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One of the key advantages of a risk pool is that it can offer stable prices. A pool's premiums would necessarily reflect trends in judicial awards, but conservative underwriting practice coupled with sound business management should enable a pool to maintain premiums at a relatively stable level.

A risk pool can also provide policies and coverage tailored to the nonprofit sector. A pool could be organized such that participants are represented through an elected Board of Trustees which could work with the pool's administration and underwriters to help establish policies that reflect the insurance needs of the nonprofit community.

Risk management by those who specialize in the nonprofit field is another benefit of a risk pool. Management of existing nonprofit risk pools report that members of nonprofit organizations are generally eager to take steps to reduce the risks to which their employees and clients are exposed.

A risk pool can also help establish a rating structure based on past risk experience. Over time, a risk pool would be able to gather extensive information, not currently available, about the risk exposures of nonprofits in California.

Here are some potential benefits of a risk pool:

As for implementation, a risk pool can be composed of private nonprofit organizations in California. Preliminary discussions with experts indicate that a strong pool could be expected to achieve the stability and success of similar pools currently operating in other states.