Sep 20, 2018

Why the Social Services Sector Requires Underwriters Who Understand

Category: Social Services

In the last couple of years there has been a huge shift in focus on the non-profit and social service organization sectors. Everything from grassroots organizations to established non-profits are taking a “boots on the ground” approach to raise awareness for their respective causes as the attitude against progressive ideals has shifted into hostility at times.

Recently, we as a nation have seen attempts to cut federal spending of non-profit and social service groups, and those groups have turned to alternative funding options like private donations and pledge drives. This has caused major insurance providers who specialize in non-profits to become more engaged in their clients’ overall well-being. Now is a crucial time for underwriters in the non-profit insurance industry to operate with a high level of understanding.

Adapting to a New Order

When the Trump administration stepped in in January 2017, the future wasn’t completely certain for non-profits who promote ideals opposite of the platform the then-candidate ran on. However, the fear of those non-profits running out of operation has subsided with an adapt-or-die mentality.  However, some organizations have a different outlook given the services they offer.

Food bank resources, for example, are made up of almost entirely federal government funding. These food banks, which offer food to needy families and hungry children, worried about a 40% slash in federal funding. The initial budget proposed by President Trump called for the elimination of discretionary funding for at least 19 federal agencies and 61 other programs including community service grants aimed at reducing poverty in communities.

Behavioral healthcare is another sector that has seen a higher level of stress imposed on it. Federal, state and local government funding is still at risk and groups are having to find ways to be creative in how they operate. Ll this has put a new pressure on budgets of those groups who do have non-profit insurance, causing a re-evaluation of what is needed in an overall budget.

But with mounting pressure and stress has come an outpouring of support in donations and grants. This has given way to opportunities to serve and hire new employees within the organizations, which, finally, have opened up the doors to more risks. This is when insurance providers should answer the call to understand the risks of social services groups.

One other reason besides hiring more employees in terms of increased risk factors is that non-profit groups are now expanding their service options. While the needs of the community grow, or at least don’t go away, groups are stepping in to provide help, but are also opening themselves up to risks they did not have before.

Insurance providers see opportunity within the market to provide more coverage and attract new clients. The industry has become more competitive, but the big worry is that providers who are driving down prices may not be in the industry for the best reasons. Even though there is a lot of potential in terms of client numbers, there needs to be a compassionate understanding of risk and need.

While in the now there may be an open window to earn more business, down the road this could translate into more claims. Driving down the price may, in time, end up costing insurance providers much more in later years.

Providers should be understanding of the needs of their clients, but also balance that out with a long-term financial plan. Offering expanded services and taking on new clients is a desirable goal, but being able to offer a sustainable pricing outline is just as import

About Tangram Insurance Services

Located across the Golden Gate Bridge, just outside of San Francisco, Tangram Insurance Services is a full-service Managing General Underwriter and Program Manager offering specialty programs. We focus on industry-relevant coverage, competitive pricing, and practical business and risk management solutions for your clients. Since we are not all things to all people, we make sure to create outstanding custom-built solutions that matter to those businesses, and the brokers who serve those industries. Contact us at (888) 744-9810 to learn more about our programs.