| Committee changes reduce increase
By Michael Wacht
LAKELAND — The Florida Conference’s self insurance committee
met several times last December with the conference’s insurance
broker to find ways to minimize the rate increase on its 2002 property
and liability insurance. As a result, the committee has made changes
to that coverage and secured a rate increase of 28 percent lower than
first expected.
“The increase would have been 93 percent for an as-is renewal of
our program,” said Jim Severance, the conference’s risk manager.
“We got it down to a 65 percent effective premium increase.”
Self Insurance Committee Chairman Frank Furman said he is confident
the committee developed the best possible program.
“The two questions that churches are going to ask are, ‘How
much is this costing us?’ and ‘Is there any way to avoid it?’
” Furman said. “The self insurance committee has taken every
opportunity we know of in the insurance market…we have negotiated
and renegotiated to get as low a premium as is acceptable and still
have the coverage necessary for the churches.”
Furman said most changes will be invisible to local churches. “Churches
will see little difference other than the cost for insurance,” he
said. “For five years we’ve expanded coverage and held the pricing
relatively even. Now’s the time the pricing goes up. We regret the
increase in the premium, but it reflects the realities of the
insurance market.”
The committee made several major changes to the conference’s
insurance plan.
Reduce the upper limit of
property insurance coverage from $400 million to $75 million.
The $75 million limit is three times the “probable maximum loss”
for a single incident, most likely a hurricane. Named windstorms,
including hurricanes, are each considered one incident by the
insurance industry, even though they may strike various churches in
different cities. Fires, tornadoes, break-ins and other disasters are
considered individual incidents. Each one is covered up to $75
million. Most Florida Conference churches have property values of $10
million or less. The combined value of all property is $1.4 billion.
Reduce the liability
insurance limit from $20 million to $10 million.
Insurers nationwide are reducing their liability exposure due to
claims related to Sept. 11. Insurance carriers only offered the
conference $10 million in coverage.
Double the self-insurance
level from $250,000 per incident to $500,000 on property claims and
from $50,000 to $100,000 on liability claims.
The self-insurance program acts like a second level of deductible on
each claim. The local church pays a deductible of $750 on each
property claim. The conference’s self-insurance program will pay the
next $500,000 out of its loss fund, double what it paid in 2001. On
liability claims, the conference’s self-insurance level increased
from $50,000 to $100,000.
Self-insure half the
value of property claims between $10 million and $25 million. This
saves the conference about $920,000 in premiums, but means the
conference would have to pay as much as $7.5 million on a $25 million
claim. The conference charged churches half the amount saved, or about
$460,000, and put that money into its loss fund to cover incurred
claims. The final premium savings will be about $460,000.
Several components of the insurance plan remain the same.
Local church deductibles
remain at $750 per incident.
Churches in south Florida will continue to pay a higher deductible for
wind storm claims, as mandated by the insurance industry.
Workers’ Compensation
premiums remain the same. This
decision is dependent upon the State of Florida keeping rates for
church employee job classifications the same. Premiums will increase
if a church adds people to its payroll.
One change will save churches money if they choose to pay their
insurance premiums in installments.
Reduce the service fee
from 8 percent to 6 percent.
The reduction in the service fee for churches that pay their premiums
in installments is made possible by lower interest rates charged to
the Florida Conference by the premium finance company.
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