By Michael Wacht

LAKELAND — Florida Conference churches will pay an average of 65 percent more for property and liability insurance in 2002 than they paid in 2001. For some of the conference’s larger churches, this could mean an increase of as much as $50,000, while smaller churches may see an increase of a few hundred dollars.

The conference’s total property and liability insurance cost will increase from $5.3 million to more than $8.9 million.

The primary cause of the increase is a nationwide rise in property insurance rates, according to Jim Severance, the Florida Conference’s risk manager. He said there were indications last August that the insurance market was “hardening” and rates would increase for 2002. At that time he believed the increase for the conference would be between 20 percent and 25 percent.

Severance said the past year’s decline in the stock market hurt the insurance industry. “Insurance companies make money off investments,” he said. “When the market goes down, they don’t make the same amount of money and they have to make up for that somewhere.”

The state of Florida was also expecting higher rate increases than other parts of the nation. Florida is considered a “riskier” state because of its extensive coastline and the danger of hurricanes, according to Severance. “Insurance carriers are deciding not to do business in Florida,” he said. “It’s the law of supply and demand. There’s a lower supply of insurance carriers, so the cost for insurance increases.”

Frank Furman, chairman of the conference’s self insurance committee and chairman of Frank H. Furman Insurance Inc. in Pompano Beach, said 1992’s Hurricane Andrew was “a great awakening for many insurance companies” about the risks of operating in Florida. He said 12 insurance companies went out of business because of claims caused by the storm. Another 12 were “severely impaired.”

Severance said the collapse of the World Trade Center in New York Sept. 11 also affected insurance companies, many of which believed they would never have to pay insurance claims of that magnitude. That belief led those companies to charge significantly lower rates for large properties, such as the World Trade Center or the $1.4 billion in property owned by the Florida Conference and its churches, than they charge for homes and smaller businesses.

“Sept. 11 just turned everything upside down and amplified what was already going on,” Severance said.

Another factor in the rate increase is the Florida Conference’s recent insurance claim history, including claims in Tavares and Miami of more than $2.7 million and $1.6 million, respectively, caused by fire and a collapsing roof.

“Our largest cost increase is in property insurance…because the carriers are anticipating other possible large losses,” Severance said. Three recent sexual misconduct cases filed against the conference have also had an impact, but a significantly smaller one than the large property claims.

Furman said there is little churches can do to combat the increase in insurance premiums. It is more expensive for churches to insure themselves than to participate in the conference’s plan because they would have to insure a maximum of $1.4 billion in property, rather than the $75 million limit for the conference as a whole.

“There’s no one thing you can do to reduce the premium,” Furman said. “I’d ask churches to continue to adhere to the information from risk management about how to protect their people and property. There are also generalities like identifying and eliminating trip and fall hazards, following safety procedures in operating church automobiles…You can do this and keep the premiums from going up.”

Severance said the reported value of church property and building contents is going to play a more important role. The property insurance program has typically paid churches the full cost of rebuilding without regard to the value of the property values contained in the risk management database. This year the program will pay a maximum of 115 percent of the reported value of any property, even if that does not cover the full cost of rebuilding. Any cost incurred in bringing an older building up to modern building codes will be paid in addition to the 115 percent.

“It behooves churches to make sure their property values are right, not only the buildings, but the contents, too,” Severance said. “Churches need to do detailed inventories of their contents.”