Church Insurance Rates Are Skyrocketing

A series of disasters, including Gulf Coast hurricanes, California wildfires, Midwest flooding, and severe thunderstorms, combined with post-COVID construction cost increases, have severely impacted the insurance industry. 

As a result, according to Insurance Journal, companies like Church Mutual, GuideOne, and Brotherhood Mutual, which insure churches, have seen their reserves shrink and have dropped high-risk churches to cut losses.

And just think, that doesn’t even account for “activists” taking their rage to destroying churches…

Hundreds of United Methodist churches in the Rio Texas Annual Conference lost property insurance last November, leaving officials scrambling.

Over six months later, some churches found new insurance at higher costs, while others remain uninsured, said Kevin Reed, conference board of trustees president.

Reed noted the conference had about a month’s notice before their property insurance was canceled, which wasn’t enough time to secure new coverage, leaving local churches to fend for themselves.

“We have not found a good solution. It continues to be a significant problem for our churches,” he said. 

The report says that United Methodist churches in Iowa have also lost insurance following severe weather, according to the Iowa Annual Conference.

Rev. Ron Carlson, the conference treasurer, said both small rural and larger churches were affected. The conference urged churches to proactively check their insurance instead of waiting for renewal offers.

The UMC’s Book of Discipline requires full replacement and liability insurance for church buildings, which Carlson noted is not feasible for some. The conference is working to address what happens to these uninsured churches.

Finding new insurance is challenging since churches are a high-risk, niche market. They are open to the public, serve various age groups, run social services, and often have large, expensive buildings with little oversight, said Charles Cutler, president of ChurchWest Insurance Services.

“Because of the First Amendment and the separation of church and state, ministries are largely unregulated. And unregulated businesses are difficult to underwrite,” Cutler said.

The church insurance market, like the broader industry, has faced significant challenges recently, according to the report. 

Supply chain issues and rising construction costs post-pandemic have increased rebuilding expenses, leading insurers to hike rates. Natural disasters like hurricanes, wildfires, and severe thunderstorms have further strained insurance companies’ reserves, causing AM Best to review Church Mutual and downgrade Brotherhood Mutual’s ratings. GuideOne was only stabilized by a $200 million investment from Bain Capital.

The high-risk nature of insuring churches, combined with pressure from reinsurers to reduce coverage, has left many congregations struggling.

Churches, already dealing with declining memberships and donations, now face skyrocketing insurance costs. The situation has forced some to cut programs, delay essential maintenance, or even contemplate closing.