Across the U.S., organizations of all types, including houses of worship, face rising costs and greater risks. There are many reasons behind these trends, and in this article we look at some of the key factors that should shape organizations’ risk prevention strategies.
Here are some of the most prevalent trends as we head toward 2025.
Weather-related disasters are factoring into expected probabilities for most models. Various geographic areas have seen greater-than-normal weather disasters, and this unpredictability poses both modeling challenges for insurers and greater risk for insureds. The best way organizations can adapt is by taking extra steps to safeguard their buildings and people from the weather.
Those steps include:
- Make sure the building is in good repair. Perform regular inspections and fix any items noted. Protect property from windstorms by adding roof tie-downs, storm shutters, and a wind-rated garage door. Keep any items that are stored outdoors secure so they do not become airborne and injure people or damage property. Hire a professional to inspect the roof regularly and ensure it can handle high winds.
- Review policies annually with an insurance professional. Building replacement costs have risen more than 55% since 2019, so even if a policy is relatively new the values may already be out of date, putting organizations at risk of being underinsured when a severe weather event hits.
- Create an emergency management plan and share it with local law enforcement. This plan should provide a blueprint for how organizations will protect both their buildings and their people.
Social inflation and Nuclear Verdicts are forcing insurance companies to shift the burden of a rising number of claims to their customers. Plaintiffs are seeking larger amounts for their injuries, which ultimately results in higher insurance premiums. Because this is more of a societal than individual problem, organizations cannot plan for this risk directly. They can, however, focus on avoiding the injuries to begin with through:
- Slip, trip and fall prevention.
- Security and crime prevention.
- Cybersecurity.
- Illness and injury prevention.
The increased cost of building supplies means organizations should budget more for building maintenance. Escalating building supply prices mean the costs to replace “big ticket” items such as the roof, HVAC systems, and boilers are often higher than organizations might expect. They should budget accordingly. In addition, it costs much more to replace a building than it did even 10 years ago. This rising cost of building supplies—and, as a result, insurance—can be problematic for organizations that do not fully prepare for it. They need to account for increased costs by bringing in more money. There can be significant consequences for under[1]insuring a property.
Aging infrastructure may lead to insurability problems for houses of worship. It is important for houses of worship to keep a close eye on whether their building has fallen into disrepair. While many people feel age adds to the charm of a church, synagogue, or mosque, it can also lead to costly problems. To mitigate this risk, houses of worship may need to upgrade certain vital aspects of their facility to keep their insurance policy. They should also prepare their building for severe weather, which could have a devastating effect on their bottom line if it causes major damage to their infrastructure.
Increased online offerings could raise cybersecurity risks. The COVID-19 pandemic showed people across the world that it was possible to replace many in-person interactions with virtual alternatives. Today, many organizations are finding that people want to continue those online interactions. That poses a challenge for cybersecurity, which could become compromised with greater use of virtual offerings. The best ways for organizations to shore up their cybersecurity are to:
- Create a written internet use and access policy, providing training on the policy for all staff and volunteers.
- Provide cybersecurity training to employees upon hire and periodically throughout the year. This training should include how to identify phishing, spear phishing, ransomware, and other malicious emails.
- Stress the need for creating strong passwords or pass phrases by using a combination of upper- and lowercase letters, numbers, symbols, and special characters.
- Use multi-factor authentication in addition to passwords or pass phrases for an added layer of protection for internal systems and data.
- Keep software and apps on all internet-connected systems up to date and delete unused apps to reduce the risk of infection from malware or ransomware.
- Regularly back up information that is critical to the organization’s operation.
- Require permission to access the organization’s Wi-Fi network.
- Complete criminal background checks on all individuals who have access to the organization’s systems and devices.
- Allow system and device access only to those who have been approved and use authority levels to limit access to sensitive or critical data.
- Prepare for an attack by reviewing and evaluating the vulnerability of all computer-related systems within the organization, and review insurance coverage.
Risk prevention is the backbone of the insurance industry and is also the best way for organizations to take control of their own fate. Without a strong risk prevention program, an organization may face greater losses, inadequate coverage, and higher premiums and deductibles. It is worth the effort and investment.